May 16-17, 1996
Montana State University--Northern
|BOARD ACTION: Approved unanimously July 1, 1996 (Helena).|
REGENTS PRESENT: Jim Kaze (Chairman), Paul Boylan, Colleen Conroy, Pat Davison, Mike Green (Thursday's session), Kermit Schwanke, and Margie Thompson; Commissioner of Higher Education Jeff Baker
REGENTS ABSENT: None
THURSDAY, MAY 16, 1996
Chairman Jim Kaze called the regular meeting of the Board of Regents to order at 11:05 a.m. in Donaldson Commons at Montana State University--Northern. Roll call showed that a quorum was present.
Regent Pat Davison moved that the Board approve the minutes from the March 28-29, 1996 regular meeting as mailed to Board members with correction of a typo on page 6 as noted by Regent Colleen Conroy. The motion passed unanimously.
a. ITEM 91-100-R0596--Staff; Office of the Commissioner of Higher Education [AMENDMENT: Change job title for Richard Crofts to Interim Commissioner, and change proposed 1996-97 salary to $106,956 effective 7/1/96.]
b. ITEM 91-1000-R0596--Staff; The University of Montana--Missoula (including addendum) [AMENDMENT: On page 1, withdraw entry for Thomas A. Morarre. On page 4, change current salary for George Dennison, President, from $102,369 to $100,406, and add $106,856 as proposed 1996-97 salary effective 10/1/96.]
c. ITEM 91-1008-R0596--Resolution Concerning the Retirement of C. LeRoy Anderson, Professor of Sociology, College of Arts and Sciences; The University of Montana--Missoula
d. ITEM 91-1009-R0596--Resolution Concerning the Retirement of Richard J. Hayden, Professor of Physics, College of Arts and Sciences; The University of Montana--Missoula
e. ITEM 91-1010-R0596--Resolution Concerning the Retirement of Merle E. Manis, Professor of Mathematical Sciences, College of Arts and Sciences; The University of Montana--Missoula
f. ITEM 91-1011-R0596--Resolution Concerning the Retirement of Geoffrey N. Richards, Professor of Chemistry, College of Arts and Sciences; The University of Montana--Missoula
g. ITEM 91-1012-R0596--Resolution Concerning the Retirement of Forrest D. Thomas, Professor of Chemistry, College of Arts and Sciences; The University of Montana--Missoula
h. ITEM 91-1500-R0596--Staff; Montana Tech of The University of Montana [AMENDMENT: On page 1, add $92,500 as proposed 1996-97 salary for Lindsay Norman, Chancellor, effective 10/1/96.]
i. ITEM 91-1500A-R0596--Staff; Montana Bureau of Mines and Geology
j. ITEM 91-1600-R0596--Staff; Western Montana College of The University of Montana [AMENDMENT: On page 2, add $83,900 as proposed 1996-97 salary for Sheila Stearns, Chancellor, effective 10/1/96.]
k. ITEM 91-1900-R0596--Staff; Helena College of Technology of The University of Montana
l. ITEM 91-2000-R0596--Staff; Montana State University--Bozeman
m. ITEM 91-2000A-R0596--Staff; Montana State University--Bozeman [AMENDMENT: On page 3, add $106,856 as proposed 1996-97 salary for Michael Malone, President, effective 10/1/96.]
n. ITEM 91-2300-R0596--Staff; Agricultural Experiment Station
o. ITEM 91-2300A-R0596--Staff; Agricultural Experiment Station
p. ITEM 91-2400-R0596--Staff; Extension Service
q. ITEM 91-2400A-R0596--Staff; Extension Service
r. ITEM 91-2700-R0596--Staff; Montana State University--Billings
s. ITEM 92-2700A-R0596--Staff; Montana State University--Billings [AMENDMENT: On page 1, add $94,438 as proposed 1996-97 salary for Ronald Sexton, Chancellor, effective 10/1/96.]
t. ITEM 91-2701-R0596--Post Retirement Employment Contract for John B. Mueller; Montana State University--Billings
u. ITEM 91-2800-R0596--Staff; Montana State University--Northern
v. ITEM 91-2850-R0596--Staff; Montana State University College of Technology--Great Falls
w. ITEM 91-2850A-R0596--Staff; Montana State University College of Technology--Great Falls
Capital Construction Items:
a. ITEM 91-1006-R0596--Construct Moot Court Room, School of Law; The University of Montana--Missoula
b. ITEM 91-2001-R0596--Authorization to Provide Painting for Residence Life and Family Housing Facilities; Montana State University--Bozeman
c. ITEM 91-2002-R0596--Authorization to Refurbish and Reinstall the Ventilating and Exhaust Units on the Harrison Kitchen Roof; Montana State University--Bozeman
d. ITEM 91-2003-R0596--Authorization to Replace the Roofs on Colter and Mullan Dormitories; Montana State University--Bozeman
e. ITEM 91-2004-R0596--Authorization to Remodel the Information Technology Center (ITC) Area of Renne Library; Montana State University--Bozeman
f. ITEM 91-2703-R0596--Authorization to Build an Additional Parking Area; College of Technology, Montana State University--Billings
a. ITEM 91-001-R0596--Approval of Executive Board Appointments: Mr. Kelly Flynn (WMCUM); Mr. Todd Murphy (MSU-Bozeman); Mr. Jim Sites (MSU-Billings); Ms. Constance Lord (MTUM); Mr. David Rice (MSU-Northern): and Mr. Sam Roberts (UM-Missoula); Montana University System
Regent Mike Green moved that the Board approve all items on the Consent Agenda as amended (staff, capital construction, and other). The motion passed unanimously.
Chairman Kaze welcomed Margie Thompson from Butte as the new regent. He said she replaced Cordell Johnson and had been appointed to a seven-year term by Governor Marc Racicot.
Commissioner of Higher Education Jeff Baker introduced Assistant Adjutant General Hal Stearns and State Education Officer John Nugent from the Department of Military Affairs to make a presentation on the Montana National Guard Scholarship Program.
General Stearns said the Montana Air and Army National Guard was developing a financial aid proposal to take to the 1997 Legislature. The two issues were (a) an amendment of Montana law to allow for a tuition and fee waiver until age 25, for Guard dependents, if a Guard member was killed while serving on state active duty; and (b) development of the Montana National Guard Scholarship Program. According to the draft legislation (on file), $760,000 in general fund would be appropriated each year for fiscal years 1998 and 1999 to the Department of Military Affairs to award scholarships pursuant to the Montana National Guard Scholarship Program that would be developed under the legislation.
General Stearns and Mr. Nugent supplemented their presentation with overheads and a video presentation and said they wanted to inform the Regents and give them a heads-up on the program. The scholarship program represented their efforts to enhance recruiting and retention benefits and keep Guardsmen in Montana. General Stearns noted that 35 states throughout the country had some type of education benefit for Guard members. They would be working on the funding issue and would appreciate the Regents' support or encouragement. He said they would work with the Regents to make sure everything would work well in the university system if the bill passed.
Chairman Kaze said the Board would continue to monitor and coordinate the issue through the Commissioner's Office as they headed into the legislative session.
In response to a question concerning whether the interim Joint Committee on Postsecondary Education Policy and Budget would discuss the program as part of its agenda, Senator Greg Jergeson said it could likely be discussed in the context of discussions about student financial aid in general.
Chairman Kaze thanked General Stearns and Mr. Nugent for their presentation.
George Dennison, president of The University of Montana, introduced newly elected ASUM president Jason Thielman and vice-president Barbara O'Leary.
Sheila Stearns, chancellor at Western Montana College of The UM, announced that Kris Johnson was the new ASWMC president.
Lindsay Norman, chancellor at Montana Tech of The UM, introduced ASMT president Chris Veis.
William Daehling, chancellor at Montana State University--Northern, introduced ASNMC president Kyle Leeds.
Jim McCray, ASMSU president, introduced himself to the Regents and said he was also the new MAS (Montana Associated Students) president. He said MAS wanted to forward its nomination to Governor Racicot that Mike Green be reappointed student regent.
The Regents also heard remarks from ASUM president Jason Thielman and ASNMC president Kyle Leeds. Both said they looked forward to working with the Board during the upcoming year.
The Academic and Student Affairs Committee met at 9:00 a.m. in the library conference room. Committee members present included Regents Pat Davison (chairman), Kermit Schwanke, Margie Thompson, and Mike Green. Chairman Kaze asked committee chairman Regent Davison to present the committee's report to the full Board.
The following Level I changes were approved by the Office of the Commissioner of Higher Education (May 15, 1996 memorandum from Richard Crofts on file).
a. The University of Montana--Missoula
The program review process completed last year eliminated the M.S. in Rural, Town and Regional Planning. To implement that decision, the undergraduate major and the graduate program will both have the two options listed below:
B.A. in Geography Rural, Town and Regional Planning
M.A. in Geography Rural, Town and Regional Planning
b. College of Technology, Montana State University--Billings
Reinstate the certificate program in Automotive Technology. The same courses as for the A.A.S. degree in automotive technology will be utilized, but fewer and different related study courses will be required.
a. ITEM 91-2005-R0596--Authorization to Establish the Montana Manufacturing Extension Center; Montana State University--Bozeman
Montana State University President Michael Malone reviewed the item, and the Board concurred with the committee's recommendation to move ITEM 91-2005-R0596 to the action agenda at the July 1-2, 1996 meeting in Helena.
CONSENT AGENDA -- ACTION
a. ITEM 90-401-R0396--Approval of Proposal for Certificate and Associate of Applied Science Degrees in Building Technology; Miles Community College
b. ITEM 90-1006-R0396--Approval of a Proposal to Offer a Bachelor of Arts Degree with a Major in Native American Studies; The University of Montana--Missoula
c. ITEM 90-1007-R0396--Approval of a Proposal to Offer an Entry-Level Doctor of Pharmacy Degree in Pharmacy in Addition to the Present Bachelor of Science Degree in Pharmacy, School of Pharmacy and Allied Health Sciences; The University of Montana--Missoula
d. ITEM 90-1501-R0396--Approval of Proposal to Offer a Two-Year Associate of Applied Science Degree in Geographical Information System/Global Positioning System (GIS/GPS); College of Technology, Montana Tech of The University of Montana
e. ITEM 90-1901-R0396--Approval of Proposal to Offer a Two-Year Associate of Science Degree; Helena College of Technology of The University of Montana
f. ITEM 90-1902-R0396--Approval of Proposal to Offer a Two-Year Associate of Applied Science Degree in Metals Technology; Helena College of Technology of The University of Montana
g. ITEM 90-2003-R0396--Authorization for the College of Graduate Studies to Offer a Master's Degree in Science Education; Montana State University--Bozeman
h. ITEM 90-2708-R0396--Authorization of Proposal to Implement Certificate in Emergency Medical Technician-Paramedic and/or Associate of Applied Science (A.A.S.) in Emergency Medical Services; College of Technology, Montana State University--Billings
i. ITEM 90-2851-R0396--Approval of Proposal to Award the Associate of Science Degree in Business; Montana State University College of Technology--Great Falls [AMENDMENT: Remove "in Business" from title]
After brief discussion, Regent Davison moved that the Board concur with the committee's recommendation to approve Consent Agenda ITEMS 90-401-R0396, 90-1006-R0396, 90-1007-R0396, 90-1501-R0396, 90-1901-R0396, 90-1902-R0396, 90-2003-R0396, 90-2708-R0396, and 90-2851-R0396 (as amended with "in Business" removed from the title). The motion passed unanimously.
a. ITEM 90-1601-R0396--Approval of Proposal to Offer a Bachelor of Applied Science Degree at Western Montana College of The University of Montana and Montana Tech of The University of Montana
After brief discussion, Regent Davison moved that the Board concur with the committee's recommendation to approve ITEM 90-1601-R0396. The motion passed unanimously.
b. ITEM 91-2803-R0596--Approval of Proposal to Electronically Deliver Selected Courses to a Variety of Communities in Montana; Montana State University--Northern
Regent Davison said this item had been moved from submission to the action agenda.
After brief discussion, Regent Davison moved that the Board concur with the committee's recommendation to approve ITEM 91-2803-R0596. The motion passed unanimously.
For the July 1996 meeting, Regent Davison said the committee--at the request of Deputy Commissioner for Academic Affairs Richard Crofts--would discuss the procedures for the Board's Notice of Intent/Submission/Action process in relation to two-year education program proposals. He said a briefer process might better meet their needs, and the committee agreed to explore that option.
After brief discussion, Chairman Kaze thanked Regent Davison for the committee's report.
The Board recessed at 11:55 a.m. for a meeting with student representatives.
When the Board reconvened at 1:20 p.m., Chairman Kaze said Nancy Keenan, Superintendent of Public Instruction, wanted to make a presentation to the Board.
Superintendent Keenan distributed a paper (on file) to the Regents titled "Request for Exception to the Board of Regents 120 Credit Requirement for Undergraduate Degree Programs." Dated May 1996, the request was prepared by the Montana Council of Deans of Education, School Administrators of Montana, Montana Education Association, Montana School Boards Association, Montana Rural Education Association, Montana Federation of Teachers, and the Superintendent of Public Instruction.
Superintendent Keenan said the purpose of the paper was to address the impact on teacher education programs as the result of the phase two policy that called for a maximum of 120 credit hours in baccalaureate degrees within the Montana University System. She said an amount beyond 120 credits for all teacher education programs was justified by the professional requirements of certification, state and national accreditation, and the demands of the profession to adequately prepare teachers for schools in Montana and throughout the country. Superintendent Keenan said this position had been unanimously adopted January 6, 1996, during a joint meeting in Helena of the Deans of Education, the chief academic offices of the university system, the deans of Arts and Sciences, and representatives of the Superintendent of Public Instruction, the School Administrators of Montana, and the Montana Education Association. She said while she did not disagree with the 120-hour limit, it should not be hard and fast and exclude consideration for exceptions.
Following discussion, Regent Davison asked about the Board's procedures for considering exceptions.
Richard Crofts, Deputy Commissioner for Academic Affairs, said they would likely deal with the requests for exceptions from the teacher education programs at the July 1996 meeting. The exceptions would follow the criteria outlined in the policy.
Chairman Kaze thanked Superintendent Keenan for her presentation.
The Administrative/Budget Committee met at 9:00 a.m. in Donaldson Commons. Committee members present included Regents Colleen Conroy (chair), Paul Boylan, and Jim Kaze. Chairman Kaze said he would present the committee's report to the full Board at Regent Conroy's request.
a. ITEM 91-301-R0596--Authorization to Increase Tuition Fees; Flathead Valley Community College
b. ITEM 91-1001-R0596--Student Computer Fee Allocation; The University of Montana--Missoula
c. ITEM 91-1002-R0596--Recycling Fee; The University of Montana--Missoula
d. ITEM 91-1003-R0596--Change the Name of the Business Administration Building to the Education Building; The University of Montana--Missoula
e. ITEM 91-2706-R0596--Student Equipment Fee Allocations; Montana State University--Billings
Regent Conroy moved that the Board concur with the committee's recommendation to approve Consent Agenda ITEMS 91-301-R0596, 91-1001-R0596, 91-1002-R0596, 91-1003-R0596, and 91-2706-R0596. The motion passed unanimously.
a. ITEM 90-001-R0396--Inventory and Validation of Fees; Montana University System
Regent Conroy moved that the Board concur with the committee's recommendation to approve ITEM 90-001-R0396. The motion passed unanimously.
b. ITEM 2-015-R1073--Consulting Services; Faculty (REVISED 401.1)
Chairman Kaze said ITEM 2-015-R1073 had been on submission at the March 1996 meeting, and action was being postponed until later in the meeting.
c. ITEM 21-003-R0778--Appeals (REVISED 203.5.2)
Chairman Kaze briefly reviewed ITEM 21-003-R0778, which had been on submission at the March 1996 meeting.
Regent Conroy moved that the Board concur with the committee's recommendation to approve ITEM 21-003-R0778. The motion passed unanimously.
d. ITEM 26-016-R0380--Employment Contract; Professional and Administrative Employees (REVISED 711.1)
Chairman Kaze briefly reviewed ITEM 26-016-R0380, which had been on submission at the March 1996 meeting.
Following discussion and comments from Chief Legal Counsel LeRoy Schramm, the Board agreed to include language in future Letters of Appointment indicating that employment was subject to the policies and procedures of the Board of Regents.
Regent Conroy moved that the Board concur with the committee's recommendation to approve ITEM 26-016-R0380 as amended. The motion passed unanimously.
e. ITEM 91-1004-R0596--Special Fee, School of Law; The University of Montana--Missoula
Chairman Kaze briefly reviewed the item, noting that the fee was not new to the students even though it was now going to be imposed. He said students entering the law school had been advised of the fee ahead of time.
Regent Conroy moved that the Board concur with the committee's recommendation to approve ITEM 91-1004-R0596. The motion passed unanimously.
f. ITEM 91-1005-R0596--Certificate of Completion, Parking Facilities (Phase I), Series A 1993 Facilities Improvement and Refunding Revenue Bonds; The University of Montana--Missoula
Chairman Kaze said by nature of the trust indentures involved, the university was required to provide a certificate of completion once the project was finished and was requesting the Board's authority to execute that certificate of completion and submit it appropriately.
Regent Conroy moved that the Board concur with the committee's recommendation to approve ITEM 91-1005-R0596. The motion passed unanimously.
g. ITEM 91-1007-R0596--Special Fee, Physical Therapy Master's Program; The University of Montana--Missoula
Chairman Kaze said when the university moved to the master's level of physical therapy, part of the approval on the Board's part was recognition that this increased fee item would be forthcoming--from $1,000 per year to $3,500 per year in order to support additional faculty and accreditation issues associated with the degree. Chairman Kaze said the students had been advised in advance and were aware of the fee increase upon entry into the program.
Regent Conroy moved that the Board concur with the committee's recommendation to approve ITEM 91-1007-R0596. The motion passed unanimously.
h. ITEM 91-1501-R0596--Authorization to Sell Real Property to the Montana Tech Foundation; Montana Tech of The University of Montana
Chairman Kaze said ITEM 91-1501-R0596 had been discussed at length during the committee meeting. They were assured by Chief Legal Counsel LeRoy Schramm that all the legal requirements had been met. He noted that Ross Best of Missoula had presented the Board with a written objection (on file) to the item, stating that it was unconstitutional to sell the property to the Foundation based on the fact that the advertisement before the sale of the property included a restriction to those activities that supported Montana Tech's purposes and fundraising. After discussion, the committee decided that in order to cover that issue they ought to develop language for some type of reversion in the event the property would no longer be used in that regard to eliminate the potential of having someone say the property could be used somewhere else based on this restriction.
Chief Counsel Schramm said he had spoken with Chancellor Norman and drafted the language, which would replace the first sentence in the item; everything after that would remain the same. The replacement language stated:
The Board of Regents of Higher Education finds that the sale of the below-listed property is in the best long-run interests of the University System in that it is likely to enhance fundraising efforts benefitting Montana Tech. Therefore, the sale is approved provided the documents transferring title contain the following proviso: If the property ceases to be used primarily for ongoing fundraising efforts for Montana Tech, and functions related thereto, the property will revert to the University System, along with improvements. Should the property at the time of reversion be encumbered, the University System will discuss with the Foundation an acceptable method of dealing with the encumbrance, subject to final approval by the Board of Regents.
Chief Counsel Schramm said since this sale was the first one approved by the Board under the new statute, it would go to the Land Board in June for concurrence.
Regent Conroy moved that the Board concur with the committee's recommendation to approve ITEM 91-1501-R0596 as amended.
Regent Davison asked whether a long-term lease was explored.
Montana Tech Chancellor Lindsay Norman said the principal reason for a sale arrangement was to give the Foundation total freedom in the design and construction of a facility on the property. He said the Foundation wanted to construct an alumni center and conferencing center on the land. It would ultimately house the Montana Tech Foundation, the Montana Tech Alumni Office, and would also have conferencing and meeting space available for the college's use.
Regent Mike Green pointed out that nothing in the statute said they could not put restrictions on the land.
After further discussion, Regent Conroy's motion to approve ITEM 91-1501-R0596 as amended with the new language passed unanimously.
i. ITEM 91-2702--R0596--Purchase of Real Property; Montana State University--Billings
Chairman Kaze said this involved the last of the homes on Normal Avenue that the college did not own and pointed out it was being purchased at the appraised value or below its immediate appraised value.
Regent Conroy moved that the Board concur with the committee's recommendation to approve ITEM 91-2702-R0596. The motion passed unanimously.
j. ITEM 58-7006-R0388--Building and Maintenance Fees; Montana Vocational Technical System (971.7.1. REVISED)
Chairman Kaze said this revision would bring the policy more in line with similar policies that applied to the four-year institutions. It removed the individual fee item and replaced it with the ability of the colleges of technology to come forward on an individual basis. He said it was more a housekeeping change than anything else.
Regent Conroy moved that the Board concur with the committee's recommendation to approve ITEM 58-7006-R0388. The motion passed unanimously.
k. ITEM 91-2006-R0596--Authorization to Allow the Construction of a Temporary Research Facility for the Study of Whirling Disease (REVISED); Montana State University--Bozeman
Chairman Kaze noted that ITEM 91-2006-R0596 was a late addition to the agenda. He said the Board had initially approved the item at the March 1996 meeting. After giving it additional consideration, the Department of Administration asked for a small change in the language because of the possibility that the project might involve not only federal funds but also private funds or both. The DOA felt that reference should be included, and the item now indicated the facility would be financed either from federal or private funds or a mix thereof.
Regent Conroy moved that the Board concur with the committee's recommendation to approve ITEM 91-2006-R0596. The motion passed unanimously.
a. Administrative Services Review
Rod Sundsted, Associate Commissioner for Fiscal Affairs, said he would briefly review some of the key points in the Administrative Services Review report (on file). He said the report originated last July when the regents passed the resolution for phase two of the restructuring, which called for a review of administrative functions within the system. A second component involved examining investment and reinvestment of savings and putting in place incentives to encourage the system to continue its review and find efficiencies. The review involved extensive participation from the campuses, along with representatives from the Office of Budget & Program Planning (OBPP), the Legislative Fiscal Division (LFD), and some private-sector individuals in the study groups. Mr. Sundsted said a number of the recommendations at the campus level had already been or were now being implemented. The report attempted to address issues with systemwide implication and bring those to the Regents. One with the largest initial dollar impact involved the investment of university system funds. Mr. Sundsted said the interest from current unrestricted, including the tuition account, designated and some restricted accounts, accrued to the general fund. The recommendation was to retain those interest earnings on the campuses. He said when they got to the financial aid recommendation, they would see that those were tied together because the investment earnings were largely student funds, which was an appropriate source of revenue for the financial aid recommendation.
Mr. Sundsted said it was important to point out that there would be some loss of interest earnings to the general fund associated with the change. It was the system's position, however, that incentives be put in place to encourage them to manage their cash flows and maximize investment earnings. An additional recommendation focused on ways to try to increase returns on investments.
Mr. Sundsted said a large number of recommendations concerned the procurement process, surplus property, and publications and graphics. Some involved changing statutes, and some involved increasing the delegation authority to the university system. They were also asking for the authority to examine options to increase competition in worker's compensation by being able to look at private carriers or to self-fund worker's compensation insurance in the system. Other recommendations in the human resource area involved looking at issues of merit pay, an optional retirement program for classified staff, and additional flexibility in the area of compensation and classification to tailor the system more to the campuses' needs. The report also included recommendations on compatibility of administrative systems within the university system.
Mr. Sundsted asked that these be approved as part of the budget priorities and said he planned to submit them to the Governor's Office and OBPP as part of the Executive Planning Process (EPP).
In response to a question from Regent Davison, Mr. Sundsted said the state general fund would lose some revenue as a result of these recommendations. However, Mr. Sundsted said it was his belief that the university system would gain more revenue than what would be lost to the state because they would be putting incentives in the right place. He said there currently was no financial incentive for the system to try to maximize its fund balances or increase its investments.
Commissioner Baker said Mr. Sundsted had spent a lot of time working not only with the campuses but with other government agencies and coordinating the recommendations. He said the process was not exclusive to system personnel only.
Mr. Sundsted pointed out that cooperation did not necessarily mean concurrence. He said although some of the recommendations may appear threatening to some people, they were putting them forward in good faith and would try to move ahead.
President Dennison called the Board's attention to page 15 of the report, noting one of the proposals that did not secure consensus. The proposal involved the establishment of the Higher Education Building Authority, which would provide a mechanism by which The University of Montana and the system could begin to use many of the same techniques now used for auxiliary use to do some necessary work on academic buildings--laboratories, classrooms, etc. He said figuring out how to fund that was a challenge, but he believed it was a risk worth taking.
President Dennison said they had another proposal (on file) that was a variation on the Higher Education Building Authority. Their estimate for renovation of classrooms and laboratories on the four campuses of The University of Montana, along with disability access to ensure that students with mobility impairments could get into the facilities, amounted to $14 million. He referred the Regents to page 3 of the proposal. To fund that amount, they could perhaps use an academic facilities fee, which would consist of a certain percentage of nonresident tuition. By using some percentage of that, they could generate a pool of funds that would be available to retire some bonds that the regents could sell for the purpose of doing some work on the classrooms and laboratories.
Regent Davison said he thought the proposal presented by President Dennison should be pursued.
Chairman Kaze also favored continued discussion of it and asked that it be fleshed out for the Board to review again.
President Malone said Montana State University had similar ideas and would also like to discuss the proposal further.
Governor Racicot pointed out they would want to bring in legislative leadership early in the discussions before too much effort was expended.
b. ITEM 91-002-R0596--Acceptance of the Report from the Task Force on Financial Aid Entitled "MEETING THE CHALLENGE--Helping Montana Students Finance College" and Authorization to Proceed with the Recommendations of the Task Force; Montana University System
Chairman Kaze said the Board had reviewed the draft version of this report at the March 1996 meeting, and the final version was now before them for action.
Commissioner Baker said approval of the item meant that the Board of Regents accepted the report of the Task Force on Financial Aid Reform and thereby instructed the Commissioner of Higher Education to include the task force's grant proposal among the funding priorities to be requested by the Montana University System from the 1997 Legislature and to draft the necessary accompanying legislation. With its approval, the Board of Regents was also requesting the MHESAC Board to review the task force's recommendations and proceed with implementation of the family education planning programs and any other recommendations of the task force that MHESAC could fulfill. The Commissioner of Higher Education was further charged with coordinating among all state agencies and MHESAC to accomplish the task force's recommendations.
After brief discussion, Regent Davison moved that the Board accept the report and approve ITEM 91-002-R0596. The motion passed unanimously.
c. Budget Priorities
Associate Commissioner for Fiscal Affairs Rod Sundsted said they were preparing their budget requests for the EPP for consideration in the executive budget. Although they had not participated in the EPP in the past, he felt it was important to get their ideas before the executive for consideration with other priorities. Mr. Sundsted said once the campuses developed campus budget priorities, he had met with Jim Todd from The University of Montana--Missoula and Rob Specter from Montana State University--Bozeman to develop some system priorities.
Mr. Sundsted reviewed his May 16, 1996 memorandum to the Regents (on file). The first area involved previously approved initiatives they needed to present to the executive. The first was the collaborative agreements with the educational units. The agreements had been approved by the Regents and coordinated with the Governor's Office. The financial documents accompanying the agreements basically funded them with no additional general fund support other than the normal pay plan that might be available for all state employees. Otherwise, they were funded internally through reallocations, through efficiencies, and through tuition. The second was the collaborative agreements for the agencies. Mr. Sundsted said the agreements in place for those agencies had also been approved by the Regents. However, there was no current commitment in place concerning where the funds would come from to pay the salary increases. He said the shortfall in funding the unfunded portion of those was about $1.6 million.
Mr. Sundsted said the issue facing the Regents was where that dollar amount fit in their budget priorities. He said with those agreements being approved, only a few options were available. They could make the salaries a budget priority and ask the state for general fund to cover the unfunded portions of the agreements. They could defer the funds from the educational unit in which the agencies were located, which would be a fairly significant amount at Montana State University. They could move general fund over and have to backfill with tuition or another revenue source. They could also ask the agencies to restructure and downsize. Mr. Sundsted said if they decided to go forward and ask that those funds be backfilled by the state, they needed to decide where the agency salaries fit among other budget priorities.
Mr. Sundsted said the other part of the EPP was not necessarily new proposals, but the executive asked that they identify what were considered significant, present-law base adjustments they would be asking for inclusion into the budget. He said operation of new facilities was the largest, along with resident enrollment increases. Mr. Sundsted said he was concerned that they were overestimating resident enrollment projections. Since 1992, which was the first year resident and nonresident enrollment were maintained separately, resident enrollments actually had decreased every year, although not significantly. He said they had projected large increases going into the last legislative session that did not materialize. They were again projecting large increases, and he was concerned they would not materialize. Mr. Sundsted said he was concerned that if they asked that all additional funds be put into enrollment growth, less would be available for other initiatives such as technology. If the enrollments did not materialize, they would end up returning that money to the state when in fact had they not projected higher in the first place they may have had those funds available for other initiatives. Mr. Sundsted said he planned to submit the priorities to the executive but asked to hold open the issue of enrollments. He said he felt they needed to revisit the issue to make sure they were not overestimating resident enrollments.
Commissioner Baker said he wondered what had happened in the past week to promote a reevaluation that they would now have 700 more students in 1998-99. He said he found that troubling. What it said was that they were undermining their own credibility.
Governor Racicot pointed out that pain was also involved in underestimating.
Following further discussion, Mr. Sundsted said they would proceed with their current enrollment information, but they needed to get together to work out the issues on incentives. He pointed out that one of the things he thought they overestimated going into the process was their ability to predict enrollments. Though there was room for disagreement, he wanted to make sure that what they finally put forward was their best estimate of what they thought would happen in the future. He said they would harm themselves as a system if they overestimated.
Mr. Sundsted said if additional funding were available, the system's number one priority would likely be some type of technology initiative. Though distance-learning was difficult to define two years down the road, the concept was to put forward an initiative that paralleled the virtual university built upon what was currently in place and to expand that to reach Montanans who were otherwise place-bound and try to increase access through that means. First, they would allocate a portion of funds to the units based on their capabilities and needs. Second, they would call for RFPs to serve various segments identified so that the units or other organizations could submit proposals to the Regents to address the specific needs around the state through distance-learning. The Regents could review and accept or reject those proposals.
Aside from distance-learning, Mr. Sundsted said there was a great deal of work that needed to be done on campuses in terms of computers, central computers, administrative computing, multimedia classrooms, library technology enhancements, etc.
d. Discussion of Agency Salaries
The Board heard presentations from Michael Malone, President of Montana State University, Tom McCoy, Director of the Agricultural Experiment Station, and Andrea Pagenkopf, Director of the Cooperative Extension Service. Following the presentations, President Malone reviewed three options to fund the agency salaries: a tuition surcharge at Montana State University, a systemwide tuition surcharge, or general fund support.
In response to a question from Governor Racicot, Commissioner Baker said he would take the responsibility for not having resolved the issue. He said a lot of time had been spent discussing the issue, but there were no easy solutions.
President Malone said there was no question that the agency faculty were indeed faculty.
President Dennison said this was an issue in every state that attempted to provide an agricultural experiment station and extension service. He said he found that in his experience in Colorado that the University of Colorado did not support Colorado State University in its provision of extension and experiment station services throughout the state. That was regarded as the responsibility of Colorado State University.
Senator Greg Jergeson said it did not come as any great surprise that funding these agencies was a problem. He said they had been dealt with separately from the rest of the university system in several legislative sessions. When they went to lump-sum funding, he asked that the agencies be excluded from that lump. That was the decision of the subcommittee and was maintained throughout the legislative session. He said the problem was not addressed in the 1995 session and was now compounded. Senator Jergeson said another reason he thought the agencies should be kept outside the main lump was that he did not think a tuition solution was appropriate. The students paying tuition for the cost of their education were doing just that. The programs offered by agencies were not services that necessarily accrued to those students paying tuition. Instead, they were public agencies that served a public function for citizens throughout the state of Montana. He said the appropriate response should be a public response--i.e., either the general fund or acknowledgment and acceptance of the responsibility for downsizing if that were the choice. Senator Jergeson said although he could not speak for other members of the legislature or other members of the subcommittee, he thought it would be appropriate for the university system budget to be presented in two parts: the lump for the core of the university system, and the other as a separate recommendation for the agencies.
Governor Racicot said he did not recall any discussion during the collaborative agreements that there was an inadequate basis from which they would not have the ability to provide the university system contribution to the collective bargaining agreements. He said he was a bit surprised they were in this situation.
Commissioner Baker said they did not have in place, as opposed to the other agreements, a funding mechanism for the agencies. He said they had put off making a tough decision, and they were now at a point where that decision had to be made. He said they had tried for the past two year to find some way around the problem, but there was no easy way.
Governor Racicot said the agency faculty were no different than other faculty in Montana. They were faculty, pure and simple, and there was no way they could move away from the terms of the agreement. He said they had two solutions as he viewed it. They could find additional revenue or become smaller. The next step was for the system to start thinking about its priorities in terms of how much general fund might be available and whether the system wanted to prioritize in terms of addressing this issue.
Regent Boylan said that while downsizing may be an option, they had to consider the amount of real estate and property associated with the agencies. He said they had to consider the tangibles in addition to staff.
Commissioner Baker said he was not sure they should be taking out all of the tuition solution.
Regent Green said it would be a tough pill for the students to swallow if they were told an additional $1,700 would be added to their tuition for 700 ag students or 11,000 students at MSU--Bozeman.
Governor Racicot agreed that tuition was not an option in his opinion.
Lengthy discussion followed on the various options.
Chairman Kaze asked President Malone to come back in July with various options and include some dollar amount on the ramifications of each option. Governor Racicot also suggested they include an inventory of agency assets.
Chairman Kaze asked Mr. Sundsted if they needed to take any action on the budget priorities. Mr. Sundsted said he had submitted to the Budget Office what he had submitted to the Regents. If they received new directions in July, they would have to make adjustments.
a. Outside Activities and Compensation
Chief Legal Counsel LeRoy Schramm distributed a legal decision from the Maryland State Ethics Commission from the early 1980s (on file) based on the concept of avoiding the appearance of conflict. He reviewed the decision and compared it to the current situation within the Montana University System.
Concerning service on the boards of Pegasus Gold and Plum Creek, Chief Counsel Schramm said the two individuals in the system who serve on those boards also had a fiduciary duty to those corporations. Although the organizations may have many coincident interests, he said they did not have parallel interests. For that reason, it was inevitable that situations would arise in which the duties would conflict. He said the Regents would probably hear that could be dealt with by a judicious use of disqualifying and abstaining. Though that may be possible with the actuality of conflict, Chief Counsel Schramm said no amount of abstention or absenting oneself would deal with the appearance of conflict. He said the Regents may also hear that if such relationships were prohibited, they would be treating their high-level administrators differently than many other universities throughout the country. He said they would also hear that they were treating their administrators differently than other employees in the system who were allowed outside employment, but Chief Counsel Schramm pointed out that these high-level administrators had fiduciary duties.
Chief Counsel Schramm said these administrators were the highest paid in the system and in the state, they received a significant number of perquisites, and they had a high level of responsibility. If they were willing to accept all those things, they had to be willing to accept some reasonable restrictions to maintain the integrity of their organizations. Since the Board had not clearly enunciated a standard, they had to be careful about casting blame on past activity. Chief Counsel Schramm said he thought a ban on such office-holding-- excluding perhaps charitable and educational groups--was the simplest to enforce and certainly avoided any appearance of conflict. He noted that although compensation itself did not create the conflict, it heightened and dramatized it.
Chief Counsel Schramm said the Regents had the opportunity to occupy the high ground, and he urged them to do that. Although they would hear there was a price for that and their universities may be worse off, he said he did not know why a corporation would stop contributing gifts to a university just because it did not have someone on its board, or why it would not give internships, or why it would not give research grants. Chief Counsel Schramm said the Regents had to decide what price was worth paying to maintain the appearance of propriety and the actuality of integrity for the university system.
Governor Racicot said that if one successfully avoided the appearance of conflict or compromise, then the actual conflict or compromise was avoided. He said they could not ever let a problem evolve to a point of actual conflict because by then it was too late, and their fundamental fiduciary responsibility was already compromised. He said he did not believe the system's high-level administrators should be making discretionary decisions on boards of for-profit ventures, although serving on non-profit, charitable boards was entirely appropriate.
Commissioner Baker said as a matter of practicality, he viewed the situation on three different levels: disclosure, conflict of interest, and compensation. He said the conflict of interest question had to be addressed prior to any discussion on the compensation issue. These areas were outlined in his May 15, 1996 memo to the Board (on file).
President Dennison said the potential for conflict of interest would always exist. He said he also agreed with Commissioner Baker in that it did not matter whether compensation were involved. The issue concerned a perceived conflict because of the individual's involvement with an organization. President Dennison said his approach had always been that anyone in a position of responsibility must take action to not hide those associations that are inevitable but to take action to ensure that conflict did not occur. Although that was difficult to do in some situations, he said an absolute prohibition failed to deal with the realities of life. Instead, it was simply putting the issue off to one side and not dealing with it on a judgment basis. President Dennison said it was a policy issue the Regents should deal with but reminded them that his own involvement as director of a public corporation in Montana was no secret, and he had been very straightforward about it. He said they should have the policy and move forward but reiterated that an absolute prohibition was not something that would work well in today's world.
Regent Thompson said she had called four large businesses in Montana--Plum Creek, Montana Power Company, Burlington Northern, and Buttrey's--and asked for their comments on why people in the system were asked to sit on boards. Among the responses she received were: They provide a healthy balance of skills on the boards; they bring academic viewpoints and know the state; if someone is asked to sit on a board and contribute a high level of commitment, that person should be compensated; successful boards need qualified leaders, and senior officials provide that leadership; presidents and chancellors bring new directions, skill levels, and perspectives to boards; if the people from the university system are not qualified, then who is? Regent Thompson said the businesses also agreed that the potential for conflict needed to be monitored as heavily from the business standpoint as from higher education.
Chairman Kaze said they would continue the discussion the next morning. The Board recessed at 5:15 p.m. to meet with faculty representatives.
FRIDAY, MAY 17, 1996
The Board of Regents reconvened at 8:50 a.m.
Chairman Kaze they would continue the discussion of outside activities and compensation.
President Malone said there were two conflict issues from sitting on boards. One was the conflict of interest, and the other was the conflict of commitment. Does this service take an undue amount of one's effort away from his or her primary responsibility? President Malone said he has served as a member of the Buttrey Food and Drug Board since late 1992. During his three years of service, President Malone said he had never felt a conflict of interest situation in any sense. If he had, he would have dealt with it by absenting himself from that part of the decision-making process. Concerning the compensation, President Malone said he did not believe that was the main issue.
President Malone said he would prefer to remain on the Buttrey board and would be willing to donate a large portion of the compensation to the Montana State University Foundation for MSU programs. He said the interaction between university system leadership and the business community was beneficial for both sides.
Montana Tech Chancellor Lindsay Norman said he was a bit horrified at the thought of a total prohibition on board membership because of the implications, none of which were personal. He said if they were considering a total prohibition, they were actually considering getting out of step with the rest of higher education throughout the country, which he felt was the wrong direction to go. Concerning benefits to the campus, Chancellor Norman said that gifts made by Plum Creek and Pegasus Gold did not come to them because they were good guys. They came to the campuses because of relationships built over time and because of the trust that had been established. He said the relationships led to numerous campus benefits. A policy of total prohibition would send a negative, anti-business message. He suggested they consider the commissioner's recommendation, which was workable but also very stringent. Chancellor Norman urged the Board to make a positive statement in support of business interests in Montana and also recognize its trust and confidence in the university system leadership.
Following lengthy discussion, Chief Counsel Schramm distributed a draft policy (on file) for the Board's review. He said it could be accommodated to cover everything that had been discussed to that point.
After discussion of the various sections of the draft policy, Regent Davison moved that the Board adopt the policy with the elimination of Section II and the addition of "e." under Section III that would allow for a covered official to serve on for-profit boards with prior approval of the Board of Regents. He also suggested the Board follow the same submission/action process for this policy that it used for all new policies, thereby postponing action until the July 1996 meeting to provide additional time for further input and discussion of all the issues involved.
After further discussion, Regent Davison said he would amend his original motion to omit an effective policy date.
Chairman Kaze said if they ultimately adopted the policy as amended with no compensation at all, they would put the presidents in an untenable position. He said they had obligations to purchase stock in those corporations, and that issue was not addressed. By adopting the policy before them, they were not addressing the issue of present service on any boards. Is this a "grandfathering deal," or would they have to review each one? Chairman Kaze said all those issues needed to be addressed, and he did not think they should put the presidents in untenable positions.
Regent Davison's motion to approve the draft policy with the elimination of Section II and the addition of "e." under Section III stating that such service on behalf of any for-profit entity had to be previously approved by the Board of Regents, with the effective policy date left blank, passed by a roll call vote of 5 to 1; Chairman Kaze voted against the motion (Note: Item number 91-003-R0596 was assigned after the meeting).
The Board reconvened at 10:25 a.m. after a ten-minute break.
b. Legal Issues
Chief Legal Counsel LeRoy Schramm said the Land Board had met a month ago and received the Attorney General's opinion that questioned the appropriateness of the Regents' land sales since 1972. He said a response was due from the Regents by July 15 defending the legal appropriateness of the land sales. Chief Counsel Schramm said he had been in contact with private legal counsel to represent them before the Land Board should any subsequent legal activity follow from that response. He said he was requesting permission from the Board to contract with legal counsel.
Regent Boylan asked how much it would cost.
Chief Counsel Schramm said he would suspect perhaps $10,000 or more.
Chairman Kaze heard no objections from the Regents and told Chief Counsel Schramm to proceed with hiring legal counsel.
Chief Counsel Schramm distributed a handout (on file) concerning CA 30, the constitutional amendment that proposes to eliminate the Board of Regents and Commissioner of Higher Education and replace them with an eight-person commission, a department of education, and a director of education. He said when an item was referred by the legislature to the ballot, as was CA 30, the Attorney General had the statutory responsibility to prepare a 100-word summary, which was the "Statement of Purpose" included on the handout. The Attorney General had consulted with the Chairman of the Board of Regents and the Commissioner and submitted a preliminary draft for suggestions. Chief Counsel Schramm said the statement was generally accurate.
Chief Counsel Schramm said the Attorney General also had an obligation to prepare a fiscal note, on which he consulted with the Governor's budget office. He said the Commissioner's Office did not learn of the fiscal note's contents until just before it was finalized. Chief Counsel Schramm said he registered an objection by telephone, and Commissioner Baker sent a letter (on file) voicing an objection that the first sentence in the fiscal note was unnecessary and inappropriate since a fiscal note was, by state statute, limited to showing estimated increases or decreases in revenues or expenditures. As the second sentence of the fiscal note indicated, those cannot be determined until enabling legislation is passed. A second problem was that inclusion of the $2.6 million amount implied that amount would be saved if the amendment were passed, which was not true for several reasons. The $2.6 million includes significant amounts of non-state money; the federal money in that amount would not be saved. If a department of education were created, it may have more employees than the Commissioner's Office but would certainly have some employees, which meant that even the state portion of the $2.6 million would not be total savings.
Chief Counsel Schramm said when they objected to the wording of the fiscal note, the response they received from the Attorney General was that it had already been sent to the Secretary of State and was out of his hands. Chief Counsel Schramm said when he called the Secretary of State's legal counsel to find out whether the Secretary to State had the authority to correct an inappropriate fiscal note, he was told that the Secretary of State's authority was not viewed as going that far. Chief Counsel Schramm said they were now in the uncomfortable position of deciding whether to go to court to try to get the first sentence stricken from the fiscal note. He asked whether the Regents wanted to go forward and attempt to judicially remove that first sentence from the fiscal note.
After brief discussion, Regent Davison moved that the Board direct Chief Counsel Schramm to pursue legal or other methods to ensure that the fiscal note for CA 30 included no misleading statements. The motion passed unanimously.
a. Salary Recommendations for Presidents and Chancellors
Commissioner Baker said he was recommending that salaries be set for the presidents using the same methodology used to set the salaries of certain elected officials, including the governor, as set out in state law (2-16-405(2), MCA). Using that methodology, Presidents Malone and Dennison would be paid $113,305 annually beginning July 1, 1997. Commissioner Baker recommended it be implemented in two steps--the first this year and the second next year. Therefore, he was recommending their annual salaries be increased to $106,856 effective October 1, 1996. Commissioner Baker also said he had completed President Malone's evaluation this year and would share that with the Regents in a separate mailing.
President Dennison said he was recommending an annual salary of $92,500 for Montana Tech Chancellor Norman and $83,900 for Western Montana College Chancellor Stearns, both effective October 1, 1996.
President Malone said he was recommending a 5.9% increase for MSU--Billings Chancellor Ronald Sexton, effective October 1, 1996. He asked MSU--Northern Chancellor William Daehing to comment on why the chancellor's salary, along with those of other contract professionals at MSU--Northern, was being held in abeyance.
Chancellor Daehling said the salaries were not being brought forward at that time because they were in the process of restructuring the institution. Job descriptions were going to be changed, and there may be fewer positions in the years to come. Since he did not have the opportunity to sit down with the AFT to talk about budget concerns for next year and the possibility of delaying salary increases even beyond October 1, he thought it would be inappropriate and send the wrong signals to MSU--Northern faculty and staff to come forward at that time with salary increases. He said they did plan to have the process completed by July.
Regent Schwanke moved that the Board accept the salary recommendations for the presidents and chancellors (excluding Chancellor Daehling). The motion passed unanimously. [NOTE: Staff items were amended accordingly.]
b. Appointment of Interim Commissioner
Chairman Kaze said Commissioner Baker was leaving his position as of July 1, 1996, to take a job as president of Luther College in Decorah, Iowa. During the past month, the Board had reviewed potential candidates to serve as interim commissioner. Names had been submitted to the Regents from a variety of sources, including the Governor's Office and the system's campuses. The Board had interviewed some of the applicants and decided to offer the Interim Commissioner position to Dr. Richard Crofts, currently Deputy Commissioner for Academic Affairs. The appointment would extend through June 30, 1997.
Regent Davison moved that Dr. Richard Crofts be appointed Interim Commissioner beginning July 1, 1996, and extending through June 30, 1997, at an annual salary of $106,956. The motion passed unanimously.
a. The University of Montana--Missoula
President Dennison distributed a report (on file) on the Student Computer Fee Expenditures of the Missoula campus.
b. Montana Tech of The University of Montana
Tom Waring spoke briefly on the "Montana Tech of The University of Montana Academic Restructuring" (on file). The document outlined the college's changes in its academic structure. In essence, Dr. Waring said, they reduced six deans to four and adopted new names that were more traditional for the academic units--reestablishment of a school of mines, for example. Dr. Waring said the process, as with any restructuring process, took time and effort but produced a new structure that would serve the campus well, particularly the interaction with the larger university.
c. Montana State University--Bozeman
President Malone distributed the most recent tabloid from the Montana State University campuses dated Spring 1996 (on file).
Before adjourning, Chairman Kaze thanked Chancellor Daehling and his staff at MSU--Northern for hosting the Regents' meeting.
With no other business to come before the Board, the meeting adjourned at 12:00 noon.