Board of Trustees of Illinois State University February 19, 2010



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CAMPUS COMMUNICATION COMMITTEE
Good morning. The Campus Communication Committee would like to thank Dr. Phil Parette for his presentation on the Special Education Assistive Technology Center. The work of Dr. Parette and his colleagues in the SEAT Center are another example of how the research and outreach activities at Illinois State University are making a positive difference in people’s lives.

The faculty and staff of the University appreciate that we have been kept informed of the budget situation as it unfolds in Springfield. Whereas we understand that these are difficult economic times for the state of Illinois, we highly encourage the University administration, the Board of Trustees and our state officials to do all in their power to ensure that adequate and timely payments are made to the University so that it may not just maintain operations, but continue to make progress towards its goals.


Even with the current fiscal crises, we are justifiably proud of a number of accomplishments by the university. In particular, we were gratified to see ISU selected for the 6th consecutive year on the Kiplinger list of 100 Best Values in Public Colleges and to move up five spots on the list. We are also extremely pleased with our 70% six-year graduation rate and the 95\% fall to spring freshman retention rate, the latter resulting in our largest spring enrollment in several years. We are also very pleased with the level of grant activities. The Mennonite College of Nursing is commended for the 100% passing rate of their 2009 graduates on the national nursing licensure examination (NCLEX-RN) on the first try. This far exceeds the national average of 88%.
We are very excited about the newly created academic honor of University Professor and congratulate Dr. Dan Everett of Language, Literatures and Cultures on being selected as the first faculty member selected for this position.
The campus welcomes Dr. Sohair F. Wastawy, the chief librarian of the Bibliotheca Alexandrina/Library of Alexandria in Egypt, as the new dean of University Libraries. We look forward to her leadership in the continuing development of Milner Library in a rapidly changing information environment.
Finally, we congratulate the campus on its 153rd Founders Day Celebration and in particular congratulate 1969 Illinois State alumnus Thomas R. Lamont as the Honorary Degree recipient during the Convocation ceremony.
President Bowman: Thank you Dan. Now I would like to call Mr. Phil Adams to the podium to provide a legislative update.

LEGISLATIVE UPDATE
Good morning. Before I begin, before he was so famous Tom Lamont and I shared an office together on the House staff at one time and both worked for the Capital Development Board at one time and his mother sold me my first house in Springfield – he called me last week because he knew I wouldn’t be here for the event because of some committees and I can tell you he was extremely touched and very honored to get that honorary degree.

I am going to do a little more on the budget today. I believe there is a solid possibility that the House and the Senate will adjourn prior to our next Board meeting. In terms of the budget we have our first hearing in the House on March 4th. That same day the presidents will be meeting with the Director of Office Management and Budget. They wanted to meet with the presidents prior to the Governor presenting his address to the General Assembly on budget. On the March 24 we will have our Senate hearing. I think there is a great likelihood that the budget will resemble this year’s GRF number minus the stimulus money, which would put us back to some place in the $80 million range. There is a great deal of talk in Springfield about an attempt to do a six-month budget as opposed to a full fiscal year. They have done it in the past – it is difficult and it doesn’t accomplish anything. Several of the members mistakenly assume that somehow that puts additional pressure on those who are resisting some type of revenue enhancement. I don’t believe that. I also think that it will be November before that happens if it happens then. I think if it happens or it doesn’t in November is going to be predicated on the outcome of the gubernatorial election. So I don’t anticipate any additional revenue measures passing and I think we are going to have to somehow meet our monthly payroll obligations through November at the earliest before we see any change in that.

To that end we have joined with the other universities with the exception of the U of I and I believe Northeastern in becoming part of Senate Bill 461, which has two components. One would allow universities to borrow funds – the idea being if we don’t receive additional state dollars and prior to the income fund that should be arriving by September – that if we need to go out in the short term and borrow some money, we would have the legal authority to do it. That provision would sunset at the end of August. I think currently based on what is in the comptroller’s office we would be able to access something around $35 million or slightly higher. You might keep in mind that a GRF payroll for us is something approximating $7.5 million, so it would give us access to enough money to move forward if we had to. There is a 1 ½ year payback provision in it and I believe that Mr. Alt and Dr. Layzell have already discussed the idea of having some type of RFP where we would solicit institutions or I imagine we would set up a credit line with them hoping that we would not have to access it. There is a lot of support for that piece of the legislation. Unfortunately that Bill that it was put into provides for $250 million in borrowing for Medicaid purposes and that money if it comes forward would generate additional $400 million in federal monies because of a special stimulus circumstance. That part of it is meeting with some substantial resistance from the minority side of the aisle. That is not going to be a problem in the Senate because of the fact that they have a super majority. When we became combined with the Medicaid portion the requirement for passage went to 3/5 vote instead of a simple majority because to get the Medicaid part you have to increase the state’s bonding authority and that takes 3/5 votes. That Bill passed last session in the House overwhelmingly but the political dynamic has changed dramatically since then, so we will get it out of the Senate and see where we stand. Ultimately, I think they will have a tough time walking away from that and the extra federal dollars when you think most of that money goes to the doctors, pharmacies, nursing homes and hospitals. I think there will be a lot of pressure to get that through.

Another bill that I wanted to mention is House Bill 4706. I am not sure why this is in but we are certainly going to make every effort to stop it next week when it is in the higher ed committee. This bill would eliminate the current provisions that we have where those who are vested or have seven years can send dependents to public universities in the state and pay half price tuition. That original package had to be at the institution where that person is employed, that was later changed and that is a portable provision at this point. We haven’t been able to talk to the sponsor yet to find out what I think his real issue because I don’t think that is it, but we are mobilizing several groups including the major unions to be there next Wednesday when that bill is in committee.

On a much more positive note Wednesday we were in the House Education Committee on House Joint Resolution 84 sponsored by Dan Brady at our request. As you know we have an RFP out for student housing and that I believe ends today and the appropriate people will be taking a look at the submissions. There is an old state act that requires legislative approval for any housing on campus, if you do it yourselves or if some outside developer does it, if it is not a residence hall or dormitory. A portion of this would be difficult to define as one of those two entities, so we determined that we should go into the legislature and get approval for this process and we put this resolution together. Dan and I were in the committee Wednesday evening – it passed unanimously out of there. Our only real challenge is we are going to have to carefully sit down and do something about Senate sponsorship – we don’t want to get tangled up in a gubernatorial election issue when one of the candidates is not only close to us but also happens to be in the development business. I have talked to Bill about it and he understands that and when we get to that stage we will work something out.

So that is kind of where we are at this point. There will not be much going on substantively other than that. The Speaker has a pretty good lid on everything. With that I will take any questions.

Trustee Dobski: Any comments about the recent Illinois Supreme Court overturning these caps in Illinois that seemed to be holding on but all of a sudden are gone?

Mr. Adams: This is not a subject I know a great deal about but I do know this that is the third time it has happened. I believe the Speaker’s comment when asked if they were going to do something about it this session was – three strikes and you are out. So I don’t expect anything to happen. Just having observed it for a few years, if the incumbent governor gets re-elected I don’t anticipate any big move in that for a while. If it goes the other direction there might be some leverage there, but clearly the Supreme Court is on three different occasions decided for several reasons they didn’t think it was constitutional.



REPORTS
I have two reports for you this morning. With your approval Trustee McCuskey I will move to these reports.

Report 2010.02/1000.01: Goal Statements
As you know, each year the President prepares goal statements for the Board of Trustees and for the University community. The Board of Trustees engages in a similar exercise during its fall retreat. Copies of both statements were made available for today’s audience.

The sets of statements provide guidance for and are aligned with Educating Illinois, the University’s strategic plan, and the University Master Plan for physical development. Both documents reflect considerable interaction with every facet of the University community.



Report 2010.02/4000.01: Grant and Contract Activity
Illinois State University receives funding for externally funded projects from federal, state and private sources.

Externally funded grants and contracts support professional activity of faculty and staff members in basic and applied research, instructional programs and community service. You have the report in your material, but I just wanted to point out a few items.

University sponsored projects awarded in FY2009 totaled $18.4 million—a decrease from the $22.3 million high-water mark achieved in FY 2008. I note for the Board, however, that we are on pace to break the grant-funding record this fiscal year, having received nearly $17.6 million by the end of this past December. During 2010-2011, Illinois State will continue to focus on initiatives designed to encourage newer faculty members to seek external funding and to increase the number of competitive proposals submitted.

RESOLUTIONS
There are four resolutions this morning. With your approval Trustee McCuskey, I will move to them now.

Resolution 2010.02/02: Renewal of Student Health Insurance

As I say each year, the student health insurance provided by Illinois State is an outstanding value, and a constant source of compliments from students and their families. The annual fees associated with the plan will expire in August 2010, and we have negotiated with Aetna, to continue providing the same student insurance coverage with an increase in rates of 5.6 percent. Therefore, we ask you to approve a student health insurance rate of $170 for fall 2010 and spring 2011 sessions and $126 for the summer 2011 session. I ask your approval of this resolution.

Chairperson McCuskey: Is there a motion for approval? Trustee Bagnuolo so moved and was seconded by Trustee Davis. Discussion?

Trustee Bagnuolo: I just want to thank Jim Kellogg and Jason Hartzler for sitting down and talking about this resolution with me. Because of the current economic situation I think that my peers and fellow students have a growing concern anytime they hear the word increase. I think it is important to look at three points – this fee has not increased in the past three years – there are no benefits being lost – and especially when the carrier came they wanted to do a 13 percent increase and we were able to negotiate down to 5.6 percent. Based on those points I just want to show my support for this resolution.

Chairperson McCuskey: Geno do you know who was involved in the negotiations or if they are in the room?

Trustee Bagnuolo: I know two people in the room – Jim Kellogg and Jason Hartzler who are in the back.


Mr. Kellogg: Duane Sackman, the Director of Student Health Services, was instrumental in the negotiations.

Chairperson McCuskey: Well I want to give an A+ because I don’t know when the insurance company comes with a proposal of 13.1 percent how many groups get them to roll it down to 5.6 percent – it just doesn’t happen in the real world. That really was remarkable negotiations. Did you show them the claims pattern – that it wasn’t justified or how did that go in the negotiations?

Mr. Kellogg: It was a combination – going over historical data. We do have a consultant who has helped a great deal in the process so we were able to persuade Aetna that there were other resources to be brought to bear.

Trustee Bergman: How in the last couple of years did your loss runs that they paid compared to the premiums that we paid – what percentage of losses did they incur?

Mr. Sackman: Between 80-85% - about what is expected.

Chairperson McCuskey: So there wasn’t anything unusual to justify the 13 percent other than that is what they said they wanted. Did we have any opportunities to point out that there are other insurance companies that might take that contract?

Mr. Sackman: Ordinarily we have not had to point that out. We have had a very successful relationship with Aetna. Our program stands alone I believe among customers of Aetna who process their own claims. We enjoy enormous trust from the vendor in this case – the relationship is good but of course each year we re-examine it thoroughly.

Chairperson McCuskey: Motion made, seconded and vote recorded as all members present voting aye.

Resolution 2010.02/03: Three-Year Elevator Maintenance Agreement
This resolution asks the Board to amend the existing multi-year maintenance contract with Schindler Elevator Company, due to Illinois State’s compliance with life-safety codes and increased costs for repairs. That would increase spending authority by $600,000 over the life of the initial three-year contract. We would also like to proceed with annual renewals of the contract for a period not to exceed seven years. We estimate total expenditures for the remaining seven years is about $950,000 per year. I ask your approval of this resolution.

Chairperson McCuskey: Is there a motion to approve? Trustee Davis so moved and was seconded by Trustee Kinser. Discussion?

Trustee Dobski: There were bids from other maintenance companies?

Dr. Layzell: I will look to Chuck for confirmation but yes the original contract was a competitively bid process. This is just seeking to increase the expenditure authority with our initial three-year contract and then to also with the seven-year renewal agreements that we have.


Trustee Dobski: So we are still under contract?

Dr. Layzell: Yes, we are.

Chairperson McCuskey: Now the difference I wanted to ask about – with Aetna we know it is not authority – it’s a specific dollar amount. This is authority – so should we assume that the entire authority is going to be expended or what does that mean?

Dr. Layzell: Certainly for the first three-year contract we are anticipating spending the entire $600,000 through the end of June. Based on what we anticipate our expenditures are going to be for the next seven years, we feel that is a reasonable amount to assume.
Trustee Dobski: Does it make sense to get that length of a contract as opposed to shortening those contracts?

Dr. Layzell: Well each year we have a chance to renew it, so if we reach a point it is not favorable we could go out and look for other potential vendors, but our experience with Schindler is they have been the low bid on many of our elevator repair projects.

Chairperson McCuskey: The other experience I would ask about is that the low bidder doesn’t mean the most effective bidder as far as response. What has been their response and if there is an elevator problem, how long is it down?

Dr. Layzell: That is true. My sense is that our experience has been very good in terms of their response.

Mr. Scott: Within 24 hours and if it is an emergency we do have people here on campus.

Chairperson McCuskey: Do they respond within two or twenty-three hours and fifty nine minutes?

Mr. Scott: They will respond within two hours if there is a person who is trapped.

Chairperson McCuskey: And you are satisfied with the experience because Dan is new – you are satisfied with the long term with this vendor?

Mr. Scott: Yes.

Chairperson McCuskey: Motion made, seconded and vote recorded as all members voting aye.



Resolution 2010.02/04: Authorization to Increase Project Budget/East Campus Residence Hall Complex—Exterior Repairs

This is a classic once we looked behind the walls found additional problems. At your July 2009 meeting, you authorized $1.5 million for repair of the East Campus Residence Hall Complex—which includes Hewett and Manchester Halls and the Vrooman Center. The project involves the design, replacement of connecting exterior joints on the precast panels, repair of damaged structural precast panels and painting. As field investigation for the project proceeded, consultants determined the scope of the work is much more extensive and there are more repairs than originally anticipated. The market cost of the repairs is also higher than originally thought. Therefore, the University seeks approval for an increase of $1.35 million in the project budget, bringing the total cost to $2.85 million. I ask your approval for this increase.

Chairperson McCuskey: Is there a motion for approval? Trustee Bagnuolo so moved and was seconded by Trustee Maitland. My first question is to maybe to the uninitiated and now we are talking about all this money that we said we didn’t have and we are not getting and we may have to borrow – what is the difference here to educate anyone in the audience?

President Bowman: The difference here is that these repairs are being funded out of housing and dining revenue and that revenue stream is stable and is not dependent upon state appropriations. Many of the repairs including Watterson Towers are actually being done with available cash flow and borrowing won’t be involved, so this is actually a stable, predictable portion of the budget that allows us to move forward with these repairs. The dollars that we accumulate in housing and dining are now available to support other parts of the institution. If we were to show a profit in dining, for example, we could not use those funds to cover instruction during the summer.

Chairperson McCuskey: For a student seeing this, first reaction might be that they are going to be raising our rates through the roof just to take care of the exterior and elevators – what would be your response to that?

President Bowman: A portion of each student’s housing and dining dollars are set aside in a reserve fund for repair and maintenance and these projects will draw down from those reserves.

Chairperson McCuskey: So it is not going to cause a strain on the existing budget in these programs?

President Bowman: No, not at all.

Trustee Dobski: I just wanted to comment about being in business and having been involved in building restaurants or homes and even remodeling – we get bids and it’s a set figure and I guess with these size of projects – a contractor throws out a bid of $1.5 million and then six months later they get in and need another $300,000 and its approved. Whereas when contracts I have been involved with there has to be change orders and obvious things that weren’t included that you have to agree to – so it is just a learning experience for me to say that this is what happens at this level of expense.

Chairperson McCuskey: Is this really a change order when we have language during the design phase of this project, the extent of the work needed to repair the exterior was found to be greater than anticipated – that would sound as if we anticipated one thing but went in and found another.

Trustee Dobski: Well again to me my perception is that it is an open ended contract – I just find that interesting.

Trustee Bergman: One thing that I question and I understand where you are coming from Bob, but initial $1.5 million was that an actual contract that was then signed or was that an estimate that our people put together that just turned out to be too low?

Dr. Runner: Different than having a contract underway where you do need a change order – this situation is that we are not under contract yet. We have not bid this project, we are still in the planning stage. The original $1.5 million estimate was prepared internally by our staff based on unit prices of what we anticipated to be the extent of the work that would be required. Once we got approval of the project by this Board in July 2009, we publically advertised for architectural engineering services of specialists in this field. As a result of their investigation and their research the extent of the repairs necessary to the exterior of these two towers is more involved than what we thought. So, we are coming back to the Board in order to do be able to do this project correctly and do it completely and remove any hazard of those large pre-cast concrete panels and secure and seal them for the foreseeable future. If the Board gives approval for this budget increase we will then publicly bid the project with the scope as defined by our consultants.

Chairperson McCuskey: Would I be correct in this type of project while we have taken pride in having the world’s tallest residence hall, when it comes to repair as you go up in height, the price goes up also?

Dr. Runner: Yes, it is more involved – the cost and the complexity of the repairs are an issue. Also because of the heavy use of our residential halls during the year, that also adds to the complexity of it.

Chairperson McCuskey: Now the next question – so a source of project funding – bond revenue reserves - $2.85 million – are you going to be back to us again?


Dr. Runner: We hope not. There is a difference between even a complete estimate done by engineers and specialists from what the price to accomplish on any given day in any given set of circumstances – marketplace, competition of other work – so we don’t anticipate the need to come back but it is always a possibility in the world we live in.

Chairperson McCuskey: So would I be correct that with the economy there is a lot of this large crane work that is just sitting and so hopefully that is to our advantage? That there are people out there that want this but we certainly are going to hope that we don’t get just the lowest responsible bidder, we get the lowest experience in this type of work?

Dr. Runner: That is why we place great emphasis on the responsive, which includes the qualification, not the price. The price is the primary because this is a state of Illinois government project, but they have to meet the qualifications, they have to have the right certifications and they have to follow the set procedures for safety and life codes.


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