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IMD 1.040 SELECTION OF THE CHANCELLOR

Chancellor Search Procedure Report to the Board

While the Board has adopted regularized procedures to guide in the selection of campus presidents, no such procedures exist for the selection of a Chancellor. Further, the Oregon Open Meetings Law, while acknowledging the desire for confidential executive session, establishes preconditions for the use of such executive sessions. Accordingly, a public body (e.g. State Board) must: advertise the vacancy, establish regularized procedures for hiring, and provide an opportunity for public comment.

What follows is a proposed IMD entitled "Selection of the Chancellor" which, upon approval, would establish the required regularized procedures. This IMD is modeled after that utilized for the selection of a president. A public comment session was held on October 18, 2001 (yesterday). Please note that the proposed IMD acknowledges the need for guidelines established by the Board. The Board's public discussion of the IMD can include guidance from the Board on such guidelines. Eligible topics include, but are not limited to, desired use of a search firm, use of the Board's executive committee, suggestions on place of advertisement, desired time line and use of an environmental scan.

IMD 1.040 Selection of the Chancellor:

The Board retains the sole responsibility for the selection of the Chancellor and authorizes the Board president to conduct the search.

(1) When it becomes necessary to hire a Chancellor, the Board president will initiate a search. The search shall be conducted in a manner consistent with guidelines established by the Board.

(2) A search committee shall be responsible for identifying and recruiting possible candidates for the position of Chancellor.

(a) Members of the search committee shall be appointed by the Board president, with one being appointed to serve as chair.

(b) The Board president shall appoint a vice chancellor or top-level staff person who shall serve as coordinator of the search. The coordinator shall serve in a nonvoting ex-officio capacity on the committee.

(3) The search committee shall recommend three to five finalists to the Board president. The recommendations should be accompanied by a detailed report of the strengths and weaknesses of each candidate, especially in terms of the desired qualifications for the position. The recommendations from the search committee shall be unranked.

(4) The Board president shall interview the committee's finalists prior to release of a public announcement of the names of candidates to be interviewed by the full Board. The Board president shall have the authority to narrow the field of candidates after consultation with the majority of the search committee. The Board president has the authority to rank the candidates.

(5) The names of the finalists will be released to the public prior to the time that they are interviewed by the full Board.

(6) The Board will interview the finalists.

(a) The Board will meet in executive session to interview the finalists. Following the interviews, the Board will direct the Board president to negotiate with the Board's first choice. If the first choice does not accept the Board's offer, the Board president shall seek further advice from the Board before contacting the second choice.

(b) When the Board president has negotiated an acceptable appointment, the Board shall hold a special or regular meeting, open to the public, to vote on the selection of a Chancellor.

Executive Committee Recommendation to the Board

The Executive Committee recommends that the Board approve IMD 1.040 as submitted.

BOARD ACTION:

AMENDMENTS TO BOARD'S INVESTMENT POLICY

Investment Committee Report to the Board

At the June 8, 2001, Board meeting, proposed changes to the investment policy language were considered and approved for recommendation to the Oregon Investment Council (OIC). Before this new language was submitted to the OIC for their approval, concerns were raised by the Oregon State Treasury regarding the need for more specific language controlling the investments in fixed income securities. As a result, R. V. Kuhns consultants revised the proposed language. These latest changes have been approved by the Oregon State Treasury and investment consultants to the OIC.

At the September 20, 2001, meeting, the Investment Committee unanimously approved the proposed new language and recommended that the Board request approval by the OIC. Below is the portion of the policy that includes the proposed amendment (new text is bolded and deletions are bracketed):

XI. INVESTMENT GUIDELINES

A. The Fund shall maintain minimal cash, consistent with short-term requirements.
Short-term cash will be invested in the Oregon State Treasurer's Short-Term Investment Pool.

B. Fixed-income securities, for purposes of these guidelines, shall mean mortgage-backed securities, U.S. government securities, investment-grade corporate bonds, and other fixed income securities, such as certificates of deposit and commercial paper. The objective of this component of the Fund is to preserve capital in keeping with prudent levels of risk, through a combination of income and capital appreciation. Realization of income will be subordinate to safety, liquidity, and marketability (securities should be readily marketable). This component of the Fund will adhere to the following categories:

[1. Investment-grade bonds are those bonds rated in the four highest grades assigned by Moody's Investors Service, Inc. (Aaa, Aa, A, or Baa) or Standard & Poor's Corporation (AAA, AA, A, or BBB).

2. U.S. Treasury Securities shall consist of bills, notes and bonds. Securities of Federal Agencies and Federally Sponsored Agencies.

1. Average credit quality shall be A or better.

2. With the exception of U.S. Government and Agency issues, no more than ten percent of the bond portfolio at market will be invested in the securities of a single issuer or five percent of the individual issue.

3. There shall be a maximum limitation on below investment grade bonds of 15 percent of the bond portfolio.

4. There shall be a maximum limitation on non-U.S. bonds of 20 percent of the bond portfolio.

Fixed-income managers have full discretion over the allocation between long-term, intermediate, or cash equivalent investments [provided that the duration of any manager's portfolio shall not exceed the duration of the Lehman Aggregate Bond Index by more than one and one-half (1-1/2) years].

C. Equity securities are to be made primarily in well established, quality companies. The objective specific to this component of the Fund is to maximize long-term total return through a combination of income and capital appreciation. The restrictions pertinent to this portion of the Fund are as follows:

Large-Cap Equity Requirements:
Not more than ten percent of the companies invested in should have market capitalizations less than $1 billion (subject to the large-cap equity limitations of Schedule I). Portfolios should be comprised of at least 30 security issues.

Small/Mid Cap Equity Requirements:
Investments in small and mid cap companies with market capitalization similar to the Russell 2500 index (subject to the small/mid cap equity limitations of Schedule I). Portfolios should be comprised of at least 30 security issues.

International Equity Requirements:
Investments in the equity securities of companies located outside the United States are permitted (subject to the international equity limitations of Schedule I). Portfolios should be comprised of at least 30 security issues.

D. Diversification

1. Not more than five percent of the market value of any investment fund will be invested in any single issue, property, or security. This restriction does not apply to U.S. Government-issued securities.

2. No investment in any single issue, security, or property shall be greater than five percent of the total value of the issue, security, or property.

Performance expectation for each of the asset classes is described in Exhibit A.

Investment Committee Recommendation to the Board

The Investment Committee recommends that the Board adopt the proposed new language and request approval by the OIC.

BOARD ACTION: