THE BOARD OF REGENTS OF HIGHER EDUCATION
Montana University System

September 17-18, 1998

M I N U T E S

Big Butte/Highlands Room, Student Union Building

Montana Tech of The University of Montana

Butte, Montana

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These minutes were approved by the  Board of Regents at the November 19-20, 1998 meeting held at The University of Montana-Missoula, Missoula, Montana

ACADEMIC/STUDENT AFFAIRS COMMITTEE

ADMINISTRATIVE/BUDGET COMMITTEE

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REGENTS PRESENT: Pat Davison (Chair), Kim Cunningham, Ed Jasmin, Lynn Morrison-Hamilton, Richard Roehm, and Margie Thompson; Commissioner of Higher Education Richard Crofts

REGENTS ABSENT:    Colleen Conroy (excused)

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The Board of Regents convened for a work session at 8:25 a.m. in the Pintler Room of the Student Union Building. All Regents were present except Colleen Conroy, who was excused. The following items were discussed:

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Following the work session, the Administrative/Budget and Academic and Student Affairs committees met at 11:05 a.m., followed by the Regents' lunch with student representatives at 12:00 noon and the Board of Education (Regents and Board of Public Education) meeting at 1:30 p.m. via METNET in the ELC Building, Room 231, on the Montana Tech campus.

The full Board reconvened in the Big Butte/Highlands Room at 2:30 p.m. Roll call showed a quorum present. Regent Conroy was excused.

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Chairman Davison said action on the minutes from the Board's July 9-10, 1998 regular meeting would be deferred to the following day.

CONSENT AGENDA

Staff Items:

a. ITEM 100-100-R0998  Staff; Office of Commissioner of Higher Education

b. ITEM 100-1000-R0998  Staff The University of Montana-Missoula

c. ITEM 100-1500-R0998  Staff; Montana Tech of The University of Montana

d. ITEM 100-1500A-R0998  Staff; Montana Bureau of Mines & Geology

e. ITEM 100-1600-R0998  Staff; Western Montana College of The University of Montana

f. ITEM 100-1900-R0998  Staff; Helena College of Technology of The University of Montana

g. ITEM 100-2000-R0998  Staff; Montana State University-Bozeman

h. ITEM 100-2001-R0998  Retirement of Andrea Pagenkopf, Department of Health and Human Development; Montana State University-Bozeman

i. ITEM 100-2002-R0998  Retirement of Robert J. Swenson, Department of Physics; Montana State University-Bozeman

j. ITEM 100-2300-R0998  Staff; Agricultural Experiment Station

k. ITEM 100-2400-R0998  Staff; Extension Service

l. ITEM 100-2700-R0998  Staff; Montana State University-Billings

m. ITEM 100-2701-R0998  Post-Retirement Agreement for Dr. Mumtaz Fargo; Montana State University-Billings

n. ITEM 100-2702-R0998  Post-Retirement Agreement for Dr. James Friguglietti; Montana State University-Billings

o. ITEM 100-2800-R0998  Staff; Montana State University-Northern

p. ITEM 100-2850-R0998  Staff; Montana State University College of Technology-Great Falls

Capital Construction Items:

a. ITEM 100-1009-R0998   Classroom/Laboratory Renovations; The University of Montana-Missoula

b. ITEM 100-2015-R0998  Authorization to Renovate McCall Hall Room 1; Montana State University-Bozeman

Other Items:

ITEM 100-101-R0998  Rural Physician Incentive Program; Office of Commissioner of Higher Education

Amendment to ITEM 100-2800-R0998: Replacement page 7 including letters of appointment.

Regent Jasmin moved that the Board approve all items on the Consent Agenda (staff, capital construction, and other) as amended. The motion passed UNANIMOUSLY.

Commissioner Crofts referred to the September 14, 1998 memo (on file) from him to the Regents regarding salary increases for the presidents of Montana State University and The University of Missoula. He said evaluations of Presidents Michael Malone and George Dennison had been completed. Goals and objectives presented by the presidents had been reviewed and discussed in executive session. Commissioner Crofts said both presidents were doing an excellent job. Effective October 1, 1998, he was recommending a salary increase of 6.2% for each president.

Regent Jasmin suggested they explore the option of incentive compensation in the future for the presidents and the Commissioner. Chairman Davison suggested Regent Jasmin head that effort.

Following brief discussion, Regent Jasmin moved that they approve the 6.2% salary increase recommended for the two presidents by Commissioner Crofts, which would set their annual salaries at $120,405, effective October 1, 1998, but implemented according to the appropriate campus schedule. The motion passed UNANIMOUSLY.

Regent Jasmin moved that the Commissioner's annual salary be raised to $120,905, effective October 1, 1998. The motion passed UNANIMOUSLY.

STUDENT REPORTS

Tim Sulser, President of MAS and ASMT in Butte, said MAS had met the previous evening and discussed legislative issues. They also discussed distance education again and agreed to go back to their campuses for more student feedback. Mr. Sulser said another issue of the "MAS Monitor" newsletter would be out in October.

Barrett Kaiser, President of ASUM in Missoula, updated the Board on the students' voter registration and six-mill levy campaign efforts. He said they had registered about 1,400 students and were urging all of them to get out and vote. He said they hoped to have 3,000 students registered prior to the November election.

Chairman Davison thanked them for their efforts and said it would make a difference. He asked what kind of feedback they were receiving from students they were registering.

Mr. Kaiser said they were providing a lot of information on the six-mill levy and trying to educate students on its importance. He said they may encounter some problems with absentee voting, since many of the students wanted to vote in their home towns.

INTRODUCTIONS

Chairman Davison introduced and welcomed Lynn Morrison-Hamilton from Havre as the newest Regent. She was appointed by Governor Marc Racicot to fill the term recently vacated by former Regent and Board Chair Jim Kaze.

Additional Introductions:

Scott Cole, new Vice President for Administration and Finance at The University of Montana-Missoula

John Amend, Chair-elect of the Faculty Council at MSU-Bozeman

Marsha Selsor, Academic Senate President at MSU-Billings

Larry Strizich, Academic Senate President at MSU-Northern

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COMMITTEE REPORTS

Academic & Student Affairs Committee

The Academic and Student Affairs Committee met at 11:05 a.m. in the Big Butte/Highlands Room of the Montana Tech Student Union Building in Butte. Regents present were Margie Thompson (Chair), Pat Davison, and Richard Roehm. Chairman Davison asked Regent Thompson to present the committee's report to the full Board.

Announcements

The following Level I change was approved by the Commissioner's Office (see September 10, 1998 memorandum to the Regents from Deputy Commissioner for Academic and Student Affairs Joyce Scott):

The University of Montana-Missoula

Request to defer submission of ITEM 100-1006-R0998, Option in Applied Geoscience to the Ph.D. in Geology, from the September Board of Regents' meeting to the November 19-20, 1998 meeting in Missoula and move it to the Action Agenda at the January 28-29, 1999 meeting.

Submission Agenda - Consent

a. ITEM 100-1003-R0998  Approval of Proposal to Add a Revised Option in Organizational Communication, and New Options in Rhetoric and Public Discourse and Communication and Human Relationships to the Bachelor of Arts Degree in Communication Studies; The University of Montana-Missoula

b. ITEM 100-1004-R0998  Approval of Proposal to Add an Option in Teaching Ethics to the Master of Arts Degree in Philosophy; The University of Montana-Missoula

c. ITEM 100-1005-R0998  Approval of Proposal to Add a Notification of Completion of Advanced Graduate Studies to the Master of Arts Degree in Philosophy with an Option in Teaching Ethics; The University of Montana-Missoula

d. ITEM 100-2004-R0998  Authorization for the Plant Sciences Department to Rename the B.S. in Crop Science to a B.S. in Plant Science with Options in Crop Science, Plant Protection, and Plant Biology; Montana Sate University-Bozeman

e. ITEM 100-2005-R0998  Authorization for the Plant Sciences Department to Rename the M.S. in Agronomy to an M.S. in Plant Science; Montana State University-Bozeman

f. ITEM 100-2006-R0998  Authorization for the Plant Sciences Department to Rename the Ph.D. in Crop and Soil Science and the Ph.D. in Plant Pathology to a Ph.D. in Plant Science with Options in Plant Genetics and Plant Pathology; Montana State University-Bozeman

g. ITEM 100-2007-R0998  Authorization for Land Resources and Environmental Sciences (LRES) Department to Offer a B.S. Major in Land Rehabilitation; Montana State University-Bozeman

h. ITEM 100-2008-R0998  Authorization for Land Resources and Environmental Sciences (LRES) Department to Offer a B.S. Major in Environmental Science with Options in Soil and Water Science and Environmental Biology; Montana State University-Bozeman

i. ITEM 100-2009-R0998  Authorization for Land Resources and Environmental Sciences (LRES) Department to Offer a B.S. Major in Land Resource Sciences with Options in Land Resources Analysis and Management, and Agroecology; Montana State University-Bozeman

j. ITEM 100-2010-R0998  Authorization for Land Resources and Environmental Sciences (LRES) Department to Rename the M.S. Program to Land Resources and Environmental Sciences; Montana State University-Bozeman

k. ITEM 100-2011-R0998  Authorization for Land Resources and Environmental Sciences (LRES) Department to Rename the Ph.D. Program to Land Resources and Environmental Sciences; Montana State University-Bozeman

l. ITEM 100-2703-R0998  Authorization to Offer a Bachelor of Science Degree in Public Relations; Montana State University-Billings

The Board CONCURRED with the committee's request to move all submission items on the Consent Agenda to the Action Agenda at the November 1998 meeting.

Submission Agenda

a. ITEM 30-006-R0281  Out-of-State Course Offerings; Montana University System (REVISION of Board of Regents' Policy 303.6)

b. ITEM 100-1002-R0998  Approval of Proposal to Offer a Bachelor of Arts Degree in Environmental Studies; The University of Montana-Missoula

c. ITEM 100-1006-R0998  Approval of Proposal to Add an Option in Applied Geoscience to the Doctor of Philosophy Degree in Geology; The University of Montana-Missoula (item withdrawn from agenda; any Board action deferred to November 1998 meeting)

d. ITEM 100-1501-R0998  Approval of Proposal to Add a Minor in Hydrogeology to the Bachelor of Science Degree in Geological Engineering; Montana Tech of The University of Montana

e. ITEM 100-2003-R0998  Authorization for the School of Art to Offer the Bachelor of Fine Arts Degree; Montana State University-Bozeman

f. ITEM 100-2012-R0998  Authorization for the Department of English to Offer a Master of Arts Degree in English; Montana State University-Bozeman

g. ITEM 100-2704-R0998  Authorization to Offer a Master of Science in Sport Management; Montana State University-Billings

h. ITEM 100-2851-R0998  Approval to Convert the Approved Certificate Program in Practical Nurse to an Associate of Applied Science Degree Program in Practical Nurse; Montana State University College of Technology-Great Falls

Regent Thompson said ITEM 100-1006-R0998 had been withdrawn from the agenda, and any Board action was deferred to the November 1998 meeting.

The Board CONCURRED with the committee's recommendation to move all items on the Submission Agenda, with the exception of ITEM 100-1006-R0998, to the Action Agenda at the November 1998 meeting.

Action Agenda

a. ITEM 98-1002-R0398  Approval of Proposal to Offer a Certificate in Barber-Styling, College of Technology; The University of Montana-Missoula

Regent Thompson said ITEM 98-1002-R0398 had been withdrawn from the agenda at previous meetings. The committee members had received a letter from the U.S. Department of Education regarding the liability of the barber school, which was now $341.00.

Chairman Davison explained that approval of the item had been held up previously because of a fiscal question that needed resolution. That concern had been addressed and resolved and was no longer an issue.

Regent Thompson moved that the Board concur with the Academic and Student Affairs Committee's recommendation to approve ITEM 98-1002-R0398 on the Action Agenda. The motion passed UNANIMOUSLY.

b. ITEM 27-009-R0680  Transfer of Credits; Montana University System and Community Colleges (REVISION of Board of Regents' Policy 301.5)

Deputy Commissioner for Academic and Student Affairs Joyce Scott provided a summary of the proposed policy revision. She said it had to do with clarifying the faculty's role in ascribing the application of transfer credit. She noted the change had been reviewed by the Two-Year Education Committee and the chief academic officers.

Regent Thompson moved that the Board concur with the Academic and Student Affairs Committee's recommendation to approve ITEM 27-009-R0680 on the Action Agenda. The motion passed UNANIMOUSLY.

Other

a. Two-Year Education Committee's Accomplishments and Plans

Deputy Commissioner Joyce Scott referred to the one-page summary the Regents received outlining the accomplishments of the Two-Year Education Committee over the past couple years. She said a number of items related to articulation between the two-year sector and the four-year colleges. The group would assist with the Banner implementation wherever possible in areas such as student assessment, tracking, etc. They would also work with welfare-to-work, school-to-work, and workforce development issues. Dr. Scott said a prioritized list would be developed so the committee could begin to move forward on suitable activities.

In response to a question from Chairman Davison, Dr. Scott said they could probably have that list available for the November 1998 Regents' meeting.

Chairman Davison said the Two-Year Education Committee had done an exceptional and effective job in tackling some tough issues.

b. Report on Collaborative Degree Programs

Regent Thompson referred to the report (on file) the Regents received in their agenda mailing. In looking through the report, she said it was evident that when decisions were made on these collaborative degrees, they also needed to pay close attention to the costs associated with the programs, especially in the areas of technology and distance-learning. Regent Thompson said everyone should be applauded for their efforts to overcome the obstacles of one campus versus another and work collaboratively on degrees. She referred specifically to the master's program in Project Engineering and Management, which was a collaborative effort between MSU-Bozeman and Montana Tech-UM. Again, the Regents needed to look carefully at program costs. Were they funding the advertising of these programs? How would they be delivered? Although the programs provided excellent opportunities for many in the state, the cost-effectiveness of the delivery system needed close examination.

Following brief discussion, Chairman Davison thanked Regent Thompson for the committee's report.

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Administrative/Budget Committee

The Administrative/Budget Committee met at 11:05 a.m. in the Pintler Room of the Student Union Building at Montana Tech in Butte. Regents present were Ed Jasmin (Chair), Kim Cunningham, and Lynn Morrison-Hamilton. Chairman Davison asked Regent Jasmin to present the committee's report to the full Board.

Submission Agenda

a. ITEM 26-016-R0380  Employment Instruments, Professional and Administrative Employees (REVISION of Board of Regents' Policy 711.1)

b. ITEM 83-003-R0598  Student Payroll FICA Exemption; Montana University System (REVISION of Board of Regents' Policy 901.8)

c. ITEM 100-002-R0998  Competition with the Private Sector; Montana University System (NEW Board of Regents' Policy)

Following a brief review of the items, the Board CONCURRED with the committee's recommendation to move Submission Agenda ITEMS 26-016-R0380, 83-003-R0598, and 100-002-R0998 to the Action Agenda at the November 1998 meeting.

Consent Agenda - Action

a. ITEM 100-002-R0798  Mission Statements; Montana University System (NEW Board of Regents' policy)

b. ITEM 100-004-R0798  Repeal of Certain Board of Regents' Policies from the Montana University System Policy and Procedures Manual; Montana University System

c. ITEM 100-1008-R0998  Certificate of Completion, Miller Hall HVAC Improvements, Series C 1995 Facilities Improvement and Refunding Revenue Bonds; The University of Montana-Missoula

d. ITEM 100-1010-R0998  Mediated/Distance Learning Fee; The University of Montana

e. ITEM 100-2014-R0998  Authorization to Expend Student Computer Fees; Montana State University-Bozeman

Following a brief review, Regent Jasmin moved that the Board concur with the Administrative/Budget Committee's recommendation to approve action ITEMS 100-002-R0798, 100-004-R0798, 100-1008-R0998, 100-1010-R0998, and 100-2014-R0998 on the Consent Agenda. The motion passed UNANIMOUSLY.

Action Agenda

a. ITEM 100-003-R0798  Campus-Affiliated Foundations; Montana University System (NEW Board of Regents' policy)

Regent Jasmin said ITEM 100-003-R0798 was a new Board of Regents' policy that had been developed by the Task Force on Foundations over the past two years. The task force was chaired by Pat Davison, and the group tried to come up with a policy that would represent the private nature of the affiliated university foundations and also bring accountability and credibility to the reporting and public confidence in those foundations. The campuses and their affiliated foundations would be asked to prepare operating statements every other year for review by the Board of Regents. Those agreements, which would be available to the public, would outline the relationships between the two entities; incorporate an appropriate balance of foundation independence and Board of Regents' oversight; and define appropriate foundation activities.

Regent Jasmin said three of the smaller foundations had employees of their respective campuses sitting on foundation boards. According to the policy, "no employee of the Montana University System shall hold a voting position on a campus-affiliated foundation board." However, the Regents could allow exceptions to this restriction during a three-year transition period.

Following brief discussion, Regent Jasmin moved that the Board concur with the Administrative/Budget Committee's recommendation to approve ITEM 100-002-R0798. The motion passed UNANIMOUSLY.

b. ITEM 100-102-R0998  Budget Amendment, Guaranteed Student Loan (GSL) Program, Fiscal Year 1999; Office of Commissioner of Higher Education

Associate Commissioner for Fiscal Affairs Rod Sundsted said the budget item in ITEM 100-102-R0998 was the result of several actions. In reviewing the program's operations, the Legislative Auditor recommended they change the way they recorded the loans they purchased C from receivables to expenditures. As a result, expenditure authority was needed to make that accounting change. Because it was a state special revenue fund, the Board of Regents was the approving authority and could approve budget amendments in that fund group. The other portion of that was an increase in GSL's operating volume and levels that resulted in the addition of about $2 million and the FTE positions outlined in the agenda item.

Regent Jasmin moved that the Board concur with the Administrative/Budget Committee's recommendation to approve ITEM 100-102-R0998. The motion passed UNANIMOUSLY.

c. ITEM 100-1001-R0998  Medical Technology Internship Program Fee; The University of Montana-Missoula

Regent Jasmin said the fee in ITEM 100-1001-R0998 was a program fee of $1,000 per semester, which would offset the costs associated with the internship for students enrolled in the Medical Technology Internship Program operated in association with the University of North Dakota.

Regent Jasmin moved that the Board concur with the Administrative/Budget Committee's recommendation to approve ITEM 100-1001-R0998. The motion passed UNANIMOUSLY.

d. ITEM 100-1007-R0998  Authorization to Sell Approximately Nine Acres of Land Commonly Known as Fort Missoula; The University of Montana-Missoula

Regent Jasmin said ITEM 100-1007-R0998 was a request from UM-Missoula to sell about nine acres of land at Fort Missoula to the Missoula Country Club for $7,000 an acre.

In response to a question from Regent Jasmin, UM President George Dennison said the sale was essentially a boundary correction of a portion of the golf course on university land. He said they had followed all the stipulations and legislation related to the disposal of university lands. With the Regents' authorization, they would then go to the Land Board. He said the committee suggested they include within the buy/sell agreement a stipulation that the Country Club not use the land for any purpose other than the golf course. President Dennison said the Country Club was perfectly willing to do that. They would then bring the final agreement back to the Commissioner.

Following discussion, Regent Jasmin moved that the Board concur with the Administrative/Budget Committee's recommendation to approve ITEM 100-1007-R0998 and proceed with the buy/sell agreement subject to Land Board approval and a stipulation from the Missoula Country Club that the land be used only for the intended purpose as stated in the agreement. Final approval of the sale would be delegated to the Commissioner to make sure all conditions were met. The motion passed UNANIMOUSLY.

e. ITEM 100-2013-R0998  Authorization to Adjust the Scope of the Brick Breeden Fieldhouse Renovation; Montana State University-Bozeman

MSU President Michael Malone said this was the second amendment to the initial $10 million investment in the Brick Breeden Fieldhouse, which was designed and built in the late 1950s. The first amounted to $1.6 million. The additional authorization for $1.9 million would allow them to correct some unanticipated problems that were required in order to complete the renovation. It would be funded from interest earnings on the original Series 1996 bonds and from Fieldhouse facilities fees. President Malone said the authorization for the $1.9 million was expected to be the final adjustment.

Following brief discussion, Regent Jasmin moved that the Board concur with the Administrative/Budget Committee's recommendation to approve ITEM 100-2013-R0998. The motion passed UNANIMOUSLY.

f. ITEM 100-2016-R0998  Authorization to Purchase and Erect a Modular Laboratory Building at Faculty Court; Montana State University-Bozeman

Regent Jasmin said ITEM 100-2016-R0998 would authorize MSU-Bozeman to purchase and erect a modular laboratory building at Faculty Court. The estimated project cost was $400,000.

President Malone said Faculty Court was located at the southeast corner of the Bozeman campus, and the laboratory would house chemistry research facilities. It would be financed with research indirect cost recovery funds, and no state funds would be used for operations or maintenance of the facility. Following Board of Regents' approval, the project would have to be approved by the Governor.

Following discussion, Regent Jasmin moved that the Board concur with the Administrative/Budget Committee's recommendation to approve ITEM 100-2016-R0998. The motion passed unanimously.

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OLD BUSINESS

a. Regents' Information Technology Committee Status Report

Commissioner Crofts said the Regents would be shown a demonstration of some of the capabilities of the Banner program as it would be implemented, focusing specifically on how students would experience and encounter the Banner information system. Prior to the demonstration, Commissioner Crofts asked Laurie Neils, Director of Accounting and Budget, to provide a brief update on the committee's activities. He said Ms. Neils was the point person for the project in the Commissioner's Office.

Ms. Neils said her last update focused on some of the deadlines that were approaching and how they were doing regarding the timetables they were setting. She said she wanted to update them now on some of the positive outcomes from the Banner implementation. Specifically citing a budget training meeting in Billings, she said representatives from both universities were in attendance to learn about the budget module and spoke favorably about the collaboration and cooperation between the two universities. MSU was sharing some trainers with UM, and UM was sharing its expertise with the Banner system. Ms. Neils said although it would be difficult to quantify the savings that resulted from this collaboration, it was real and represented a positive outcome of the Banner implementation.

Following discussion, Regent Jasmin thanked Ms. Neils for her work with the committee.

John Cleaveland, Director of Information Technology at UM-Missoula, introduced Mark Sheehan from MSU-Bozeman's Information Technology Center. Mr. Cleaveland said the purpose of the presentation was to provide a quick demonstration of the merging web front end of the Banner administrative system, which both UM and MSU had purchased and were implementing.

Following brief discussion after the presentation, Chairman Davison thanked Mr. Cleaveland and Mr. Sheehan for giving the Regents an idea of how the Banner system would work.

The Board recessed at 3:55 p.m. to meet with faculty representatives.

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FRIDAY, SEPTEMBER 18, 1998

The Board reconvened at 8:55 a.m., following a breakfast meeting with community and business leaders.

Chairman Davison said he would entertain a motion on the July 9-10, 1998 minutes, which had been deferred from the previous day.

Regent Jasmin moved that the Board approve the minutes from the Regents' July 9-10, 1998 regular meeting as presented to the Board members. The motion passed unanimously.

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NEW BUSINESS

a. Appeal

Commissioner Crofts said the Regents had received the materials related to the appeal from Kelly Green, and he outlined the options available to the Board: deny the appeal and thereby uphold the Commissioner's decision; hold a hearing on the matter at the next Regents' meeting, at which time both sides would present oral arguments; or grant the appeal without a hearing.

Chairman Davison said the Regents had reviewed the appeal materials and asked whether anyone had questions.

Regent Morrison-Hamilton moved that the Board deny the appeal from Kelly Green and thereby support the Commissioner's decision. The motion passed UNANIMOUSLY.

b. ITEM 100-001-R0998  Operating Budgets; Montana University System

Following a brief review of how the system's operating budgets were organized, Rod Sundsted, Associate Commissioner for Fiscal Affairs, presented and explained the following graphs (on file) to provide some historical information on university system enrollments and expenditures.

Graph #1 Student enrollment history dating back to 1980 and broken out by two- and four-year enrollments.

Graph #2 Student enrollment history dating back to 1992 and broken out by residents and nonresidents.

Graph #3 Expenditures per student dating back to 1980 and broken out by actual expenditures per student and expenditures adjusted back to 1980 dollars based on the Consumer Price Index.

Graph #4 State support per resident/WUE student dating back to 1992 and broken out by general fund and millage per resident student.

Graph #5 Resident tuition as a percentage of expenditures per student dating back to 1980 and broken out by the percentage of a resident student's cost of education.

Graph #6 Historical funding-current unrestricted dating back to 1980 and broken out by general fund, tuition, millage, and other funding sources.

Lengthy discussion followed on issues such as the percentage of the cost of education Montana students were paying versus nonresident students; Board approval of the community colleges' operating budgets; the categories on the graphs presented by Mr. Sundsted; a comparison between Montana's percentage of resident tuition with regional states or nationally and the difference in the various ways those percentages were reached among different university systems; and the reasons for tuition increases, aside from the decline in state support.

Regent Jasmin said he would be interested in seeing some type of comparison that would include all fees paid by the majority of the students, whether mandatory or nonmandatory.

Mr. Sundsted said that information was available, and he would send it to Regent Jasmin. Also, as they approved the operating budgets and mandatory fees and tuition, those were summarized and some regional comparisons were made.

Following further discussion, Regent Jasmin moved that the Board concur with the Administrative/Budget Committee's recommendation to approve ITEM 100-001-R0998. The motion passed UNANIMOUSLY.

In response to a question from Regent Roehm, MSU President Malone said the additional budget books from the two universities were provided to the Regents each year, and they complemented the information in the budget book put together for the entire system.

UM President Dennison said the documents from the two universities presented the information in a different format and with more detail.

Regent Jasmin said that since the books were not put together specifically for the Regents and would be prepared anyway, he would like to continue receiving them.

Chairman Davison referred to a discussion the Regents had earlier that day with community and business leaders about the use of university resources. He said some employers thought it would be great if some people in the university system worked not only on existing research and development but perhaps applied it in different ways. For example, an employer may be faced with a specific situation, and if there was a way for someone in the system to solve that problem, it might result in a whole new industry. Chairman Davison said he would be interested in having the Commissioner develop a clearinghouse or something similar that would address the application of research. He said they should take the opportunity to perhaps employ someone in the university system to go out to businesses and ask those questions and, within the system, match those people up with the interests and expertise they have in some potential opportunities.

President Dennison suggested that before they invented a new structure it might be worthwhile to have a presentation from the two universities as to how technology transfer was actually done and working, since that was what they were talking about. He said both institutions had worked hard to put that in place, as did the other university campuses.

Chairman Davison said he was all for that. He suggested the Commissioner work with the two presidents to figure something out, since he was sure they probably had something similar already in place.

Regent Jasmin said both universities were well-represented on the Research and Development Task Force put together by the Governor that would be coming forward with some recommendations to the legislature about ongoing research and development in Montana. He said it all tied together.

President Malone said he agreed with President Dennison but felt timeliness was very important. He said the economic development issue was going to be a prime concern and opportunity in the 1999 session, so they should move as quickly as they could.

Chairman Davison requested a report at the Regents' November 1998 meeting. He said he did not want to reinvent the wheel, and he was willing to become involved if they needed help to get more of that done.

Regent Thompson said the Regents could also serve as "Information gatherers" in the area of economic development and opportunities and recommended the issue be placed on each work session agenda.

Regent Morrison-Hamilton said they also needed to consider the budget implications of the types of things they were talking about in research and development and understand that resources were limited. Perhaps they could look at different ways to build in a budgetary factor to also support that.

Regent Roehm said the reports should include recommendations on collaborative approaches not just between the two universities but also suggestions on how they could act as a clearinghouse or how that mechanism would efficiently function. He said that prior to the November 1998 meeting, he would like to see a summary of what would be said so they could be thinking about it.

Chairman Davison asked that a summary of the presentations/reports be provided to the Regents prior to the November meeting.

COMMISSIONER'S REPORT

a. Legislative Agenda

Commissioner Crofts referred to the September 17, 1998 memorandum (on file) from him to the Regents regarding the legislative agenda. He said funding issues continued to be the primary issues in every legislative session. Beyond that, he listed several areas they would pursue either by themselves or with others.

Following discussion, Commissioner Crofts said the list at that point was for the Regents' information and reaction, and the list would be revised prior to the November 1998 meting. At that time, the Regents would be asked to endorse a final list of legislative priorities.

b. Salary Increases in the Next Biennium

Commissioner Crofts referred to the September 3, 1998 memorandum (on file) from him to the Regents. He said the fundamental issue was the system's classified employees. For the past four years, the system had made significant efforts in trying to move faculty salaries toward the averages in peer institutions. They had also been concerned about administrative salaries moving closer to equity with peer institutions. Commissioner Crofts said he and the presidents were proposing they follow a similar type of methodology with the classified employees. He said they would try to work with the MPEA, the Governor's Office, and the legislature. A market survey was being conducted by the Department of Administration, and Commissioner Crofts said the MPEA believed that many classified positions would be 10% to 15% below market. The proposal outlined in Commissioner Crofts' September 3 memo would pursue market-competitive salaries for all employee groups, including classified employees, with equal effort. He said they were beginning to discuss the proposal with classified staff as he, Rod Sundsted, and Joyce Scott visited the campuses.

Chairman Davison said the Board shared those concerns and would continue to push for better pay increases for classified staff.

In response to a question from Regent Jasmin, Rod Sundsted said he thought the work on the salary survey had been completed but he had not seen a published document.

Regent Roehm said he hoped the survey would show not only an employee's gross income but also net pay and other costs that canceled out salary increases. He said in past years the classified employees had received small salary increases only to have those wiped out by increases in the amount they had to pay for health care. He said they should make sure the legislature was aware of those things.

Discussion followed on the university system's health care insurance program; the feasibility of joining the state's health care insurance program; the state pay plan; the Governor's budget and the state's share of the pay plan; and whether there would be additional costs for training people on the Banner system.

Commissioner Crofts said he did not think any action on the proposal was necessary at that time. However, he did want to hear from the Board whether there was any opposition or whether anyone was uncomfortable with the approach. Hearing none, he said they would proceed in that direction.

c. Presidential Discretionary Funds

Commissioner Crofts referred to the September 17, 1998 memorandum (on file) from him to the Board of Regents. He said when the policy on campus-affiliated foundations was discussed at the July meeting, a question was raised about presidential discretionary funds. Commissioner Crofts said he was asked to work with the presidents and others and come back to the Board with a recommendation about the use of and procedures related to presidential discretionary funds. He said the recommendation was to separate that particular issue from the foundation policy.

Commissioner Crofts said what was essentially being recommended was that the presidents and chancellors submit specific budget proposals for discretionary funds to their foundation boards. Also, although they had been discussing presidential discretionary funds, there may be discretionary funds either directly or indirectly made available to other administrators -- those would be subject to the same requirements. Once a budget proposal was approved by the foundation board, expenditures from the funds would have to be approved by a member of the foundation board or an officer of the foundation who was not an employee of the university system. At the close of the year, the president or chancellor would prepare a report to the foundation board accounting for the expenditures. The audit procedures of the foundation board would require that all expenditures be judged by the auditors as legitimate and approved business expenses, and within 60 days of the close of the fiscal year of each foundation the president or chancellor would provide to the Commissioner a report on those expenditures, which the Commissioner would make available to the Regents. Commissioner Crofts said he recommended that the process he described be implemented through approval of the operating agreements that were requested in the campus-affiliated foundations policy the Regents approved the previous day.

Chairman Davison referred to Page 2, #4, of Commissioner Crofts' September 17 memo, which stated: "The audit procedures of the foundation will include specific determination that expenditures from discretionary accounts are for legitimate and approved business expenses." He suggested the language as written suggested that every expenditure be tested, and he did want not want them to create a huge auditing expense. He suggested the foundations and campuses visit with the auditing firms to revise that language.

Following discussion, Commissioner Crofts asked the Board to endorse whether this direction was agreeable to them. He said with these general guidelines in mind -- the categories listed on Page 2, #5, may be refined to improve their clarity -- they would proceed accordingly, and the Board would have the final opportunity to make sure those were met in the operating agreements.

Presidents Dennison and Malone said they were comfortable with the approach outlined in Commissioner Crofts' memo.

Regent Roehm said he felt they were moving in the right direction with their ultimate objective that the public not perceive those discretionary funds as secret slush funds with no oversight. He said the steps outlined in Commissioner Crofts' memo provided for oversight and categorization, and he endorsed it.

In response to a question from Regent Thompson about the use of the term "presidential" discretionary funds, Commissioner Crofts said they would try to revise the language so that funds for others besides the presidents were not excluded.

Following further discussion, the Regents concurred with the approach outlined in Commissioner Crofts' September 17, 1998 memo.

The Board reconvened at 10:05 after a 10-minute break.

d. Tuition Adjustment and General Fund Reallocation

Commissioner Crofts referred to the September 17, 1998 memorandum (on file) from him to the Board of Regents. He said one of their budget priorities was a request for $2.2 million from the Governor and legislature to begin a four-year phase-in program of lowering the percentage of the cost of education paid by students in the Colleges of Technology (COTs) from 34% to about 18%.

Commissioner Crofts said several years ago the Board had considered but not approved a similar proposal from UM to make this type of adjustment. Since that time, much discussion had taken place along with some changes in attitude, since the current request was #7 on their list of budget priorities. His September 17 memo broadened that approach and suggested the possibility of achieving that within existing resources. He said they were not abandoning their budget priorities and would still attempt to secure that funding from the Governor and legislature. However, they were also examining a way to possibly achieve the same goal within existing resources.

Commissioner Crofts said the allocation model had been the focus of a meeting last winter, and one of the issues discussed was the feasibility of varying the percentage of the cost of education paid by students not only in the Colleges of Technology but also on the four-year campuses. The proposal outlined in his memo suggested what would happen if students paid less of the cost of education at the four smaller campuses and more at the larger Missoula and Bozeman campuses. Under the scenario presented, for example, students at Missoula and Bozeman would pay 40% of the cost of education, students at the other four-year campuses would pay 28%, and students at the COTs would pay 18%. Commissioner Crofts said the proposal was a tuition adjustment and general fund reallocation proposal. Those institutions that lost tuition revenue would have that revenue loss offset by additional general fund allocation.

Commissioner Crofts reviewed the spreadsheet attached to his memo, which used the 40%, 28%, and 18% figures and a four-year phase-in implementation period. Noting that he was talking about general fund/millage support, he used UM-Missoula and Western-UM as examples. The allocation in the current year was $3,872 for Missoula and $3,737 for Dillon, which was based on students at both campuses paying the same percentage of the cost of education. Under the proposed scenario, at the end of the four-year phase-in period Western-UM would be receiving an allocation of $4,051, and the general fund support for UM-Missoula would have decreased to $3,581. Tuition at UM-Missoula would have increased by nearly $300, while tuition at Western-UM would have decreased by about $300.

Commissioner Crofts said the total funding figures demonstrated the proposal was revenue-neutral, so theoretically the campuses ended up with the same amount of money. However, more would come from general fund on the smaller campuses, and more would come from tuition on the larger campuses. He pointed out that only if the proposal under discussion was implemented in a revenue-neutral manner, and if they made no other tuition increases, students at Missoula would experience a 3.4% down to 3.0% tuition increase through the four years. At Dillon, tuition would actually go down by about 4% a year. Commissioner Crofts said they had to keep in mind that in the first year of the scenario under discussion there would be an additional tuition increase, which would make the tuition increases at Missoula and Bozeman even larger and the tuition decreases at the other institutions smaller. He also said it was important to remember they were talking about reallocating general fund dollars rather than moving tuition dollars.

Lengthy discussion followed on:

Following further discussion, Commissioner Crofts asked whether the idea seemed worth pursuing. If so, they would try to bring it together with some detail and come back with a final proposal.

Chairman Davison said he viewed the proposal under discussion as a strategy to meet a specific goal or desired outcome, which was to reduce tuition at the Colleges of Technology. He said discussion of the proposal to that point had brought about a number of other questions, issues, and possible ramifications and opened the door for more extensive discussions on those. He said he could see them spending quite a bit of time at the next few meetings talking about those. He asked whether the outcome of what they discussing at that point was to reduce tuition at the COTs.

Commissioner Crofts said that was the initial issue, but the proposal under discussion went beyond that and also included the four-year schools. He noted they would continue to pursue tuition decreases for the COTs, which was #7 on their list of budget priorities. He said the approach outlined in his memorandum was a comprehensive program he thought could be achieved within their own resources, and he recommended that direction be considered seriously.

Following further discussion, the Regents agreed to endorse the concept and thought the strategy was worth pursuing through additional discussions and further research.

Commissioner Crofts said what they wanted to achieve was enrollment management. They wanted to explore the use of pricing to achieve those goals, which were a higher percentage of students in the two-year institutions and more students attending the smaller four-year campuses.

President Dennison said he believed that over the long term they would find greater access, better utilization, and better decisions being made by people who needed access to the institutions.

Chairman Davison said they had a made a good start in the conversation and asked that as many people as possible be involved in further discussions.

In response to a question from Regent Jasmin on the urgency to pursue the differential approach, Commissioner Crofts said he thought the discussions should move ahead quickly and with some urgency, but he was not certain the final decision needed to be made that quickly. As they had done during the last two legislative sessions, they would bring to the Regents' November 1998 meeting a tuition proposal for the next biennium. They would ask the Regents to tentatively approve the proposal so they could approach the legislature in January 1999 with an indication of what that amount would be. They would then live up to those commitments.

Chairman Davison suggested that any comments on the differential tuition proposal be provided to Commissioner Crofts by November 1 so they could be assembled and sent to the Regents prior to the November 1998 meeting.

Commissioner Crofts said he would communicate to the presidents, chancellors, faculty organizations, and students the status of the discussion to that point, make sure everyone had the appropriate materials, and suggest a time line for responses.

Before moving on, Chairman Davison again emphasized that they needed to remain focused on exactly what they wanted to achieve.

CAMPUS REPORTS

Montana State University

President Malone said as they wrapped up Fiscal Year 1998, the Bozeman campus came in at about $52 million a year in research, which was a record for the state. Also, to follow up on what Regent Jasmin had mentioned earlier, President Malone said they ought to consider, before the January meeting, a general presentation of the impact of university system research and development in the state.

On behalf of the Board, Chairman Davison thanked Chancellor Gilmore and his staff at Montana Tech for hosting the Regents' meeting and related activities.

Chairman Davison also extended the Board's thanks and appreciation to Rob Specter, who was leaving his position at MSU-Bozeman as Vice President for Administration and Finance.

MSU-Billings Chancellor Ron Sexton introduced Dr. Lee Peters as the campus' new Vice Chancellor for Student Affairs.

Chairman Davison said the Regents would move into a work session until 12:15 p.m., at which time they would attend the ribbon-cutting ceremony at the Mill Building.

WORK SESSION

At 11:30 a.m., the Regents continued their work session from the previous day. The following issues were discussed:

With no other business to come before the Board, the meeting adjourned at 12:10 p.m.

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