OREGON STATE BOARD OF HIGHER EDUCATION
MINUTES OF REGULAR MEETING
MT. SHASTA COMPLEX-COLLEGE UNION
OREGON INSTITUTE OF TECHNOLOGY
KLAMATH FALLS, OREGON

October 19, 2001

CALL TO ORDER

The meeting of the State Board of Higher Education was called to order at 12:02 p.m. by President VanLuvanee.

ROLL CALL

On roll call, the following Board members answered present:

Ms. Leslie Lehmann
Dr. Geri Richmond
Ms. Erin Watari
Mr. Bill Williams
Ms. Phyllis Wustenberg
Mr. Tim Young
Mr. Don VanLuvanee

Absent: Mr. Roger Bassett (prior plans), Mr. Tom Imeson (business conflict), Mr. Jim Lussier (personal conflict)

PRESIDENT'S REPORT

Board Visitation

Mr. VanLuvanee thanked President Dow for a wonderful reception and dinner, noting that the Board members appreciated all the effort that she and her staff made to welcome them to the Oregon Institute of Technology.

Ms. Wustenberg stated that this has been one of the most positive visitations and recognized that OIT means a great deal to the region and to the state. She briefly described her interaction with some of the students on campus.

New Board Members

Mr. VanLuvanee welcomed the new Board members, Roger Bassett and Erin Watari. Mr. Bassett has more than 20 years experience in Oregon state education policy and planning. Ms. Watari joined the Board as a student representative from Southern Oregon University, where she has been active in student government. Board nominee Patricia McCaig, who was nominated by Governor Kitzhaber contingent upon senate confirmation, has over 20 years of political, legislative and public policy experience. [Note: Ms. McCaig declined her nomination on November 6, 2001]

Collaborative Research Agreement

Mr. VanLuvanee discussed several accomplishments that merit recognition by saying, "For the past three years, under the leadership of Chancellor Cox and Vice Chancellor Vines, our University System has made tremendous strides in working with state government and the private sector to encourage economic development in Oregon. You will recall the considerable work done by the Economic Development Joint Boards Working Group and the series of recommendations that resulted in new legislation during the last legislative session.

"This fall, we achieved another milestone when our University System joined with the Oregon Health & Science University to develop a new collaborative research agreement with the Department of Energy's Pacific Northwest National Laboratory in Richland, Washington. The new agreement will mean a new cooperative relationship in both research and educational activities with the National Laboratory. Initially, it will focus on collaboration in the life and physical sciences. Longer term, it will mean new educational and training opportunities; faculty and staff development programs; short courses and conferences; visiting scientist programs; collaborative research; and jointly operated research institutes. It is precisely the kind of symbiotic relationship that Oregon needs to help maximize the intellectual potential of our region and to advance our state and our region's economic future."

NASVF Conference

Mr. VanLuvanee congratulated the Corporate and Public Affairs staff for helping to host the ninth annual conference of the National Association of Seed and Venture Funds. He also discussed the efforts of Dr. Holly Zanville, Associate Vice Chancellor for Academic Affairs, and others toward securing a three-year grant through the Fund for the Improvement of Postsecondary Education. Funds will be used to improve the ability of Oregon teachers to teach reading in our state's K-12 schools.

PSU Student Crowned Miss America

Mr. VanLuvanee noted that, earlier this month, a PSU student, Katie Harman of Gresham, became the first Miss America ever chosen from Oregon.

UO's 125th Anniversary

Mr. VanLuvanee pointed out that the year 2001 marks the 125th anniversary of the University of Oregon. He noted that, in 1976, when UO celebrated its 100th anniversary, it published the state's first atlas as a gift to all Oregonians. In celebration of the 125th anniversary, UO has published the second edition of the Atlas of Oregon. President Dave Frohnmayer is traveling throughout Oregon to present copies of the new atlas to the state's school libraries.

Meeting with Governor

Mr. VanLuvanee announced that Governor Kitzhaber planned to attend the meeting via teleconference at 1:00 p.m. Therefore, the Board will interrupt its agenda to accommodate discussion with the Governor.

CHANCELLOR'S REPORT

Provost Shepard

Chancellor Cox thanked everyone who expressed concern during his recent illness. He announced that Provost Shepard planned to leave Eastern Oregon University to become president of the University of Wisconsin at Green Bay. He congratulated Dr. Shepard on his appointment.

Campus Security

Chancellor Cox stated that all presidents were seriously considering the issue of security and campus safety. He noted that it is the goal of the System to ensure the campuses are as safe as possible.

REPORT FROM IFS PRESIDENT

IFS President Wollner introduced president-elect, Elaine Deutchman, professor of mathematics at OIT, who will take office in January 2002.

Following is an excerpt of Dr. Wollner's comments:

"I'm sure we'll unanimously agree, too much has changed since I last reported to you in July. These changes have thrust on us...the opportunity and necessity of reassessing who we are as individuals and as parts of the families, the work groups, and other entities to which we routinely belong.

"Of course, I mean this not merely in the obvious sense that the wrenching events of September 11 have forced us to ponder our security and the meaning of our citizenship. As Oregonians on the leading edge of the nation's economic travail, exacerbated by the terrorism crisis, we are also confronted by unhappy realities close to home with which we are now bound by fate to deal. Governor Kitzhaber has made it clear that we in OUS, as well as other state agencies, must do this immediately and apparently with an especially cold eye. This is all by way of context for the October meeting of IFS and the extraordinary session we [recently] held. IFS, at the urging of Chancellor Cox, held a discussion on higher education in the Oregon political culture and why it has struggled to engage the imagination and support of Oregonians. [A] conversation developed between the IFS Senators and our invited guests, who included Representatives Phil Barnhart of Eugene and Kelley Wirth of Corvallis; Director Lussier; Vice Chancellor Vines; Grattan Kerans; the student body president of OSU; and Professor Emeritus of Portland State, Gordon Dodds, perhaps the foremost historian of Oregon, who set the tone of the discussion with a short talk on Oregon's political values.

"First, the State of Oregon has not historically supported higher education. In the last ten years, higher education has made some progress, but this progress has simply made up for Measure 5 losses. In an ideal world, the state would like to support higher education, but the immediate priorities are seniors and high schools... Also, our state is spending money for prisons at an approximately 250 percent increase in over ten years. Don't expect support for higher education soon for these reasons. The state does not have an adequate funding level. Since Measure 5, we've always struggled to make the minimum funding level. It will take time for the state to realize how serious the situation of higher education truly is. There are other state priorities right now. The legislators don't understand our RAM model. We have hidden from the legislators our financial problems. We do a poor job communicating the benefits of state supported higher education to Oregonians.

"In this context, I want to end this report by asking you to consider carefully four important items that IFS has directed me to raise. First...that many faculty felt blind-sided by the disappearance of the cash-back element of the health care package in this year's enrollment. For many...the loss of cash back represented a significant pay cut....

"Second, the cash-back issue is a...harbinger of the decline of the total compensation for OUS faculty members [and] the wasting away of benefits. ...In the context of expected budget cuts, it may be difficult to comprehend how salaries can be raised, but we believe this is a more urgent matter than ever before.

"Third...it is a matter of the greatest urgency that the System and the institutions refrain from the temptation to once again resolve the financial problems on the backs of students. ...This is not a time to make it difficult for those who want to learn to do so....

"Fourth, IFS respectfully requests that the Board give the utmost consideration to a seat for an IFS member on the Search Committee for the new Chancellor. Faculty must be fully invested in the choice and the best way to accomplish that would be to have direct input at the highest level."

REPORT FROM OSA BOARD

Tamara Henderson, Board chair for the Oregon Student Association and student body president at Southern Oregon University expressed concern that the recent budget cuts and the expectation that Oregon is facing a recession would mean limiting access to higher education for Oregonians. She stated that preserving access to higher education has always been a fundamental principle of the Oregon Student Association and is their first priority as they prepare for possible cuts to the OUS budget. She expressed concern that additional cuts, reduced enrollment, and over-crowded community colleges would seriously reduce access for students, forcing them to look outside of Oregon for educational opportunities.

Ms. Henderson went on to express concern regarding the energy surcharges imposed on some campuses and pointed out that students were not included in the process for initiating this fee as they were for other fees, such as the technology and building fees. She strongly advocated the need for students to be involved in the process in the future and suggested that conservation methods be imposed to address the potential energy crisis. She stated that any revenue from an energy surcharge should be used only to cover current energy costs and not to fund university reserves or other budget areas.

APPROVAL OF MINUTES

The Board dispensed with the reading of the July 20, 2001, regular meeting minutes. Ms. Wustenberg moved and Mr. Williams seconded the motion to approve the minutes as submitted. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

IMD 1.040 SELECTION OF THE CHANCELLOR

Staff Recommendation to the Executive Committee

Mr. VanLuvanee briefly discussed the meeting held last month regarding the Chancellor search. He encouraged all interested individuals to review IMD 1.040. For the record, he stated that Board members were provided with a copy of remarks made by Mr. Les Ruark, an interested citizen, regarding the search.

Mr. VanLuvanee explained the Board's responsibility for selecting the Chancellor and that the Board President is authorized to conduct the search. He said that the Board's intent was not to conduct the search in secret or in isolation, but stressed that the process would not be turned into a public display. The objective, he pointed out, was to locate the best Chancellor possible.

Addressing the process, Chancellor Cox stated that he would work with OUS Director of Legal Services Ben Rawlins to review a draft Request for Proposal (RFP) to potential search firms, and that ads would be placed shortly thereafter. Chancellor Cox said he was prepared to remain in office for as long as it takes to ensure a smooth transition. Chancellor Cox noted that Mr. VanLuvanee requested that the Chancellor and his staff support the search which was estimated to conclude in spring 2002.

Board Discussion and Action

Mr. VanLuvanee entertained a motion to approve the Executive Committee recommendation to the Board to approve IMD 1.040 as submitted. Ms. Lehmann moved and Ms. Wustenberg seconded approval of the IMD as submitted. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Williams, Wustenberg and Young. Those voting no: Director Watari.

AMENDMENTS TO BOARD'S INVESTMENT POLICY

Staff recommendation to the Investment Committee

Staff recommended approving the attached Investment Policy language changes for recommendation to the Board and Oregon Investment Council.

Investment Committee Recommendation to the Board

Ms. Wustenberg invited OUS Controller Michael Green to present a report on the Board's Investment Policy. Mr. Green explained that the policy was brought to the Board in June for a change and, subsequent to that change, the State Treasurer's Office objected and asked the Board to revisit the policy. The main objective of the change was to create necessary flexibility in the policy to allow for a broadly diversified fixed income mutual fund vehicle for the endowment fund that would include some allocations to non-U.S. funds. Staff consulted with Treasury and are now in agreement. Mr. Green specified the areas where changes were made, and stated that the Investment Committee recommended approval by the Board.Board Discussion and Action

Ms. Wustenberg moved and Ms. Lehmann seconded approval of the proposed new language. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

VETERINARY MEDICINE PROGRAM AND FACILITY REQUIREMENTS, OSU

Staff Recommendation to the Joint Budget and Finance and System Strategic Planning Committees

Staff recommended the approval of the requested Veterinary Medicine Program expansion from two years to four years with full program implementation in fall 2003.

Joint Budget and Finance/System Strategic Planning Committee Recommendation to the Board

Mr. Williams noted that, for 25 years, OSU has recognized the importance of the veterinary medicine program. Recently, the legislature provided guidance and support toward expansion of the veterinary medicine program. The Joint Committees generated a motion to expand the veterinary medicine program from a two-year to a four-year program with full implementation in fall 2004.

The Joint Committees recommended approval of OSU's request for authorization from the State Emergency Board for $4 million of General Funds and $4 million of Article XI-G bond expenditure limitation to construct the first phase, which is 13,000 gross square foot of a 32,000 gross square foot, two-story building within its campus boundaries. This would provide space for the expansion and construction should begin in sufficient time to ensure a fully operating facility by June 2004.

Board Discussion and Action

Mr. Williams moved and Ms. Lehmann seconded to approve the recommendation as submitted. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Williams and Wustenberg. Those voting no: Directors Watari and Young.

FINANCIAL IRREGULARITIES POLICY

Staff Recommendation to the Budget and Finance Committee

Staff recommended that the Board approve the Oregon University System Financial Irregularities Policy. This approval would officially incorporate the policy under the Oregon State Board of Higher Education Internal Management Directives.

Budget and Finance Committee Recommendation to the Board

Mr. Williams stated that the Budget and Finance Committee unanimously recommended approval of the Financial Irregularities Policy as submitted.

Board Discussion and Action

Mr. Williams moved and Mr. Young seconded the motion as submitted. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

FY 2001-02 BUDGET ALLOCATIONS

Staff Recommendation to the Budget and Finance Committee

Staff recommended that the Board Committee on Budget and Finance recommend the proposed Annual Operating Budget and allocations for 2001-02 as described in the Budget and Finance Committee docket, with corresponding details provided in the 2001-02 Budget Report Summary; to continue the policy governing the RAM, which added that targeted program items may only be included upon Board consideration and resolution; to delegate authority to the Chancellor to make adjustments to the OUS Annual Operating Budget for 2001-02 as required; and to approve the proposed 2001-02 travel reimbursement rates.

Budget and Finance Committee Recommendation to the Board

The 2001-02 budget was passed in the Budget and Finance Committee meeting as submitted. Full Board approval was recommended.

Board Discussion and Action

Mr. Williams moved and Mr. Young seconded the motion to approve the 2001-02 budget as submitted. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

NOVEMBER 2001 EMERGENCY BOARD ITEMS

Autzen Stadium expansion and renovation (UO)
Staff Recommendation to the Budget and Finance Committee

Staff recommended that the Board approve the request to increase the Autzen Stadium Article XI-F(1) bond limitation and that the Vice Chancellor for Finance and Administration be asked to seek an authorization from the Emergency Board for an additional Article XI-F(1) bond expenditure limitation of $9.7 million for a total project cost of $89.7 million. Staff requested the Board Budget and Finance Committee approve the staff recommendation and recommended it to the Board for approval.

Budget and Finance Committee Recommendation to the Board

Mr. Williams reported that the Budget and Finance Committee approved the staff recommendation as submitted and recommended Board approval.

Board Discussion and Action

Mr. Williams moved and Ms. Wustenberg seconded the motion to approve the Autzen Stadium expansion and renovation as recommended. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

Engineering (OSU)
Staff Recommendation to the Budget and Finance Committee

Staff recommended Board approval of OSU's request to seek Legislative Emergency Board authorization for $20 million of Article XI-G Bond limitation, to be matched with $20 million in donations appropriated as General Funds by Senate Bill 5525 as amended by House Bill 2276, Oregon Law, 2001. Staff also recommended an additional $5 million of Other Funds limitation to provide additional sustainable design enhancements to the project.

Budget and Finance Committee Recommendation to the Board

Mr. Williams reported that the Budget and Finance Committee approved the staff recommendation as submitted and recommended approval by the Board.

Board Discussion and Action

Mr. Williams moved and Ms. Wustenberg seconded the motion to approve the engineering building as recommended. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

Native American Center (PSU)
Staff Recommendation to the Budget and Finance Committee

Staff recommended that the Board approve PSU's request to seek Legislative Emergency Board authorization for an Article XI-G bond expenditure limitation, to be matched with $1.2 million of donations under previously authorized Other Funds limitation, which will serve as the General Fund match in a Donation Account authorized in Senate Bill 5525. Staff requested the Board Budget and Finance Committee consider the staff recommendation and move it to the full Board for adoption.

Budget and Finance Committee Recommendation to the Board

Mr. Williams reported that the Budget and Finance Committee approved the staff recommendation as submitted and recommended approval by the Board.

Board Discussion and Action

Mr. Williams moved and Ms. Wustenberg seconded the motion to approve the Native American Center as recommended. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

CLASSROOM BUILDING PURCHASE, PSU

Staff Recommendation to the Budget and Finance Committee

Staff recommended that the Board approve PSU's request to purchase the classroom/office facility, located at 2000 SW Fifth Avenue in Portland, Oregon, from the Bassist Corporation, for a maximum of $2.75 million plus closing costs, assuming all conditions are met and that the final purchase details are agreed upon by all parties, subject to final approval by the Vice Chancellor for Finance and Administration.

Budget and Finance Committee Recommendation to the Board

Mr. Williams reported that the Budget and Finance Committee approved the recommendation as submitted and recommended approval by the Board.

Board Discussion and Action

Mr. Williams moved and Ms. Wustenberg seconded the motion to approve the classroom building purchase as recommended. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

RESOLUTION FOR THE SALE OF BONDS

Staff Recommendation to the Budget and Finance Committee

Staff recommended the Board find that the projects for which Article XI-F(1) bonds are proposed meet the self-liquidating and self-supporting requirements of Article XI-F(1), Section 2, of the Oregon Constitution; and adopt the resolution authorizing the sale of Article XI-G and Article XI-F(1) bonds.

Budget and Finance Committee Recommendation to the Board

Mr. Williams reported that the Budget and Finance Committee approved the recommendation as submitted and recommended approval by the Board.

Board Discussion and Action

Mr. Williams moved and Ms. Wustenberg seconded the motion to approve the resolution for sale of Article XI-G and Article XI-F(1) bonds as recommended. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

REFUNDING BOND SALES

Staff Recommendation to the Budget and Finance Committee

Staff recommended the Board adopt the bond resolution authorizing the issuance of refunding bonds.

Budget and Finance Committee Recommendation to the Board

Mr. Williams reported that the Budget and Finance Committee approved the recommendation as submitted and recommended approval by the Board.

Board Discussion and Action

Mr. Williams moved and Ms. Wustenberg seconded the motion to approve the resolution authorizing the issuance of refunding bonds as recommended. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

Chancellor Cox noted that, at the request of the Senate President, the Emergency Board may not forward some items that may have General Fund implications until the status of the budget is known.

OAR 580-035-0035, RESIDENCE CLASSIFICATION OF ARMED SERVICES PERSONNEL

Staff Recommendation to the System Strategic Planning Committee

Staff recommended the Board amend OAR 580-010-0035, Residence Classification of Armed Forces Personnel, as a permanent rule. This item was previously adopted as a temporary rule in June 2001, to bring OUS into compliance with legislation passed by the last legislature.

System Strategic Planning Committee Recommendation to the Board

Ms. Lehmann reported that the System Strategic Planning Committee approved the recommendation as submitted and recommended approval by the Board.

Board Discussion and Action

Ms. Lehmann moved and Mr. Young seconded approval of the permanent rule amendment as submitted. Mr. Young expressed concern about the age component and it was noted that the amendment was required by the legislature and, therefore, the Board must also approve the age component.

On a roll call vote, the following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

B.A./B.S. IN COMPUTATIONAL PHYSICS, OSU

Staff Recommendation to the System Strategic Planning Committee

Staff recommended that the Board authorize OSU to establish a program leading to a B.A./B.S in Computational Physics. The program would be effective fall term 2001, and the OUS Office of Academic Affairs will conduct a follow-up review in the 2006-07 academic year.

System Strategic Planning Committee Recommendation to the BoardMs. Lehmann reported that the Committee unanimously approved the program proposal as requested on its consent agenda and recommended approval by the Board.

Board Discussion and Action

Ms. Lehmann moved and Ms. Wustenberg seconded the motion to approve the program proposal. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

B.A./B.S./B.Ed. IN FAMILY AND HUMAN SERVICES, UO

Staff Recommendation to the System Strategic Planning Committee

Staff recommended that the Board authorize the UO to establish a program leading to a baccalaureate degree in Family and Human Services. The program would be effective fall term 2001, and the OUS Office of Academic Affairs will conduct a follow-up review in the 2006-07 academic year.

System Strategic Planning Committee Recommendation to the Board

Ms. Lehmann reported that the Committee unanimously approved the program proposal as requested on its consent agenda and recommended approval by the Board.

Board Discussion and Action

Ms. Lehmann moved and Ms. Wustenberg seconded the motion to approve the program proposal. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

POSTDOCTORAL CERTIFICATE IN HUMAN INVESTIGATIONS, OHSU

Staff Recommendation to the System Strategic Planning Committee

Staff recommends that the Board authorize OHSU to establish a program leading to a postdoctoral certificate in Human Investigations. The program would be effective fall term 2001, and the OUS Office of Academic Affairs will conduct a follow-up review in the 2006-07 academic year.

System Strategic Planning Committee Recommendation to the Board

Ms. Lehmann reported that the Committee unanimously approved the program proposal as requested on its consent agenda and recommended approval by the Board.

Board Discussion and Action

Ms. Lehmann moved and Ms. Wustenberg seconded the motion to approve the program proposal. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

GRADUATE CERTIFICATE IN NOT-FOR-PROFIT MANAGEMENT, UO

Staff Recommendation to the System Strategic Planning Committee

Staff recommended that the Board authorize the UO to establish a program leading to a graduate certificate in Not-for-Profit Management. The program would be effective fall term 2001, and the OUS Office of Academic Affairs will conduct a follow-up review in the 2006-07 academic year.

System Strategic Planning Committee Recommendation to the Board

Ms. Lehmann reported that the Committee unanimously approved the program proposal as requested on its consent agenda and recommended approval by the Board.

Board Discussion and Action

Ms. Lehmann moved and Ms. Wustenberg seconded the motion to approve the program proposal. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

UNDERGRADUATE CERTIFICATE IN BUSINESS INFORMATION SYSTEMS, SOU

Staff Recommendation to the System Strategic Planning Committee

Staff recommends that the Board authorize SOU to establish a program leading to an undergraduate certificate in Business Information Systems, effective fall term 2001. The OUS Office of Academic Affairs will conduct a follow-up review in the 2006-07 academic year.

System Strategic Planning Committee Recommendation to the Board

Ms. Lehmann reported that the Committee unanimously approved the program proposal as requested on its consent agenda and recommended approval by the Board.

Board Discussion and Action

Ms. Lehmann moved and Ms. Wustenberg seconded the motion to approve the program proposal. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

UNDERGRADUATE CERTIFICATE IN MANAGEMENT OF HUMAN RESOURCES, SOU

Staff Recommendation to the System Strategic Planning Committee

Staff recommended that the Board authorize SOU to establish a program leading to an undergraduate certificate in the Management of Human Resources, effective fall term 2001. The OUS Office of Academic Affairs would conduct a follow-up review in the 2006-07 academic year.

System Strategic Planning Committee Recommendation to the Board

Ms. Lehmann reported that the Committee unanimously approved the program proposal as requested on its consent agenda and recommended approval by the Board.

Board Discussion and Action

Ms. Lehmann moved and Ms. Wustenberg seconded the motion to approve the program proposal. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

CONSIDERATION FOR NOMINATIONS TO THE FOREST RESEARCH LABORATORY ADVISORY COMMITTEE, OSU

Staff Recommendation to the System Strategic Planning Committee

Staff recommended that the Committee forward the nominations to the Board for final approval of the appointments and reappointments to the Forest Research Laboratory Advisory Committee.

System Strategic Planning Committee Recommendation to the Board

Ms. Lehmann reported that the System Strategic Planning Committee unanimously approved the nominations to the Forest Research Laboratory Advisory Committee as requested on its consent agenda and recommended approval by the Board.

Board Discussion and Action

Ms. Lehmann moved and Ms. Wustenberg seconded the motion to approve the nominations. The following voted in favor: Directors Lehmann, Richmond, VanLuvanee, Watari, Williams, Wustenberg and Young. Those voting no: none.

OTHER REPORTS

Ms. Lehmann referred to a handout that was presented to Board members on issues to be addressed in the year ahead. She briefly discussed the results of the retreat led by Terry MacTaggart, who presented the Board with some key questions for consideration. One of the issues included campus autonomy. She stated that it was recommended the Board hold town hall meetings in an effort to improve dialog with leadership throughout the state.

Government Relations

OUS Director of Government Affairs Grattan Kerans informed the Board that Associate Director Andy Clark will be available in December to talk about what has occurred in this Congressional session regarding campus priorities to be considered in the next session. He reported that OUS received a request to revisit the sports action lottery distribution formula.

Mr. Kerans stated that the Capital Renewal Initiative may have significant political implications and expressed the importance of reviewing this issue over the next several months.

Responding to a question by Chancellor Cox, Mr. Kerans stated that agency responses for special session must be submitted by November 16; revenue estimates come in on November 30; and the following week the Governor and legislative leadership will begin negotiations over how they will proceed in the special session. A one-day special session will probably occur in January or February 2002.

Joint Boards Working Group

Ms. Wustenberg briefly reported on the presentation by the Dean of the School of Nursing regarding the current nursing shortage. Vice Chancellor Clark noted that there is general interest regarding workforce needs. She stated that the System Strategic Planning Committee will be seeking more information about the shortages and will report to the Joint Board at the next meeting.

Dr. Clark briefly discussed the presentation on the Proficiency-based Admission Standards System (PASS) and the K-12 reform structure. Vice Chancellor Vines added that community colleges are also facing faculty shortages.

Video Appearance by Governor Kitzhaber

Following is an excerpt of Governor John Kitzhaber's remarks:

"First I want to thank you for the opportunity to take a couple of your minutes today. I wanted to...make a couple of comments about the process that we're all going through in order to prepare for [the possible special session]. As you know, the September revenue forecast is down by about $280 million... about two percent. We are expecting an additional reduction in December.... [According to] our economist...if there is some recovery, it's going to be towards the end of next year, so I think it will be very difficult for us to avoid...a special session. We're not facing a cash flow problem now, but after the first of the year, particularly if the December forecast goes down, we're going to have to take some action.

"I've taken a number of steps. ...I have unscheduled two percent from all General Fund agencies and that is about $240 million. If you combine that with a piece of the ending balance, we're technically back in balance again. That's an important step to take just in terms of our bond rating.... I've asked the state agencies to go through a process of identifying administrative reductions in two percent increments up to ten percent and then a separate list of program reductions in two percent increments up to ten percent. The administrative reduction list should be ready next week and we're looking towards the middle of November for the list of potential problematic reductions.

"...I want to make it clear, as I did when I announced this, that I am not expecting and would certainly resist simple across-the-board cuts. I think that we have to be prudent and make some judgment about relative priorities, and that we use some set of budgetary principles and [methods of screening]. ...I don't believe...that we can automatically say, 'if it's new it should be first to go'. I think we have to gauge the new programs against things that we're currently doing.

"I am applying the two percent unscheduled money and the cuts we're looking at will be across the entire General Fund. I have notified [primary and secondary education agencies] that K-12 will [also] have to participate in this because the magnitude of the cuts on other agencies, if you hold [K-12] harmless, are simply indefensible.

"In developing and considering the options that [OUS] puts forth, I'd like to just provide a couple of insights today that hopefully will be useful to you and help avoid the kind of encounter that the System experienced at the last Emergency Board [meeting]. I understand that you have a copy of the principles that I sent out to all the state agencies and...a set of [OUS] internal principles that you're using. I would hope that you would at least consider the principles that I used to establish the original budget for this biennium in approaching the special session. If you look back at the budget I proposed in December of last year, I tried, to the greatest extent possible, to protect instruction. Most of those cuts were focused on targeted program areas. I [also] proposed a number of investments that I felt were important to the long-term economic health of the state, particularly engineering, education, and expanding geographic access over in Central Oregon. Hopefully, that will become a model for doing that with other community colleges in the future.

"[Recently] the budget came under quite a bit of fire from higher education and from advocates for higher education, but I still believe that, given the need to make choices...we've got to be able to focus on the core missions of various state agencies. I note that you had listed the core mission of [OUS] as instruction, research and public service. I appreciate that all those are important and that they are all, to some extent, interrelated but I still believe that instruction, and access to instruction, is the single most important mission of the System.

"I also want to take specific note of your internal budget principles that relate to not making across-the-board cuts. I think that it is very, very important to have the discipline to stick with that. Not just within institutions, but throughout the System. I recognize that there have been some past actions in proposing budgets and in balancing budgets that had the underlying affect, or aspect, of trying to balance among institutions. I appreciate that it certainly makes the internal politics inside the System quite a bit easier, but I don't think it necessarily stands to serve the best interests of the people of the state. That would be similar to me simply accepting across-the-board cuts in state government, which makes my internal job a lot easier, but again, I don't think it reflects the highest and best use of limited public resources.

"The Board...has a clear responsibility to think in terms of the System, not just in terms of individual institutions or...campuses. [T]he Board, as the policy-making body for higher education, has a responsibility to the general public as well as to the individual institutions that make up the System, so when the Board of Higher Education and the leadership of the System propose and examine choices, I hope and...expect that you will look at those in terms of the responsibility in this larger context of the System.

"It's obviously always easier to propose additions than reductions. Unfortunately, we are faced with the reality of making some kind of reductions in order to re-balance the budget. Just as I don't advocate making across-the-board cuts at state government, I think you need to closely examine what choices you do have and which ones will do the least harm to the core mission of the [OUS]. As a Board, I would suggest that you examine the budget reduction strategy that OUS is using to determine whether you think that's the most appropriate model or strategy to be used given these broader responsibilities that I have tried to outline here. I'd also encourage you to have the staff work closely with the state budget management division as we approach the special session. Again, I appreciate the chance to visit with you and I wanted to have this contact real early so we can work closely together and with the legislative leadership to see if we can manage this challenge in a way that minimizes the negative impact on these important institutions."

Mr. Young asked the Governor if his concern with the budget model is a concern with the RAM. Governor Kitzhaber expressed concern with attempting to address the budget issue by making across-the-board cuts at the System level. He stated that it would be a mistake to suggest each institution take a two percent reduction but rather the Board would need to look at the whole System and the need to fulfill its core mission.

Provost John Moseley asked for clarification of the Governor's prioritization of the System's mission. Governor Kitzhaber stated that the main focus is to maintain access and noted that, to protect education, other cuts may be necessary, but suggested looking at the larger prioritization in balancing the entire state budget.

Dr. Richmond pointed out that some of the System's priorities may not be the same as the legislative priorities and asked how the Board should deal with those conflicts. Governor Kitzhaber stated that the System should present its priorities and arguments for consideration and debate.

Vice Chancellor Anderes asked whether the exercise is intended to be a plan that could be implemented this biennium or whether it really focused more on the $700 million deficit in the next biennium. Governor Kitzhaber stated that the most immediate challenge is in balancing the budget. He referred to the 1982 recession, noting that the overall reduction on across-the-board cuts was close to five percent. He asked agencies to utilize the incremental plan in order to develop a strategy to protect instruction without doing some real harm to a couple of other issues important to the System.

Governor Kitzhaber explained that the multiple plans will allow them to prioritize statewide to protect those programs of greatest importance. They will be focusing on one-time cuts.

Mr. VanLuvanee thanked the Governor for joining the Board meeting. After Governor Kitzhaber hung up, Mr. VanLuvanee invited questions and comments. Chancellor Cox summarized that there could be some decisions in the second year of this biennium that would carry over and become part of potentially permanent reductions. The Governor's priorities with respect to undergraduate resident instruction were discussed. Vice Chancellor Anderes estimated that, by looking at faculty and instructional support costs, the overall budget dedicated to instruction would constitute between 50 and 55 percent of the General Fund and tuition dollars, although it may be higher at a regional level. The Chancellor's staff will put together the scenarios and impact analyses, and provide that information to the Board prior to the November 16, 2001, meeting.

Dr. Richmond was concerned that this discussion hadn't taken place prior to making some decisions; adding that she may have voted differently on some issues had she known the Governor's position. She pointed out that the vet school was not one of the Board's priorities and suggested that the Board revisit its priorities and reiterate those priorities before proceeding any further. She expressed concern that the Board has proceeded well into the process of addressing the budget issue only to find it may be in conflict with the Governor's priorities.

Mr. VanLuvanee stated that the University presidents will provide the Board with their perspectives in putting together a proposal to address the budget issue.

Ms. Wustenberg agreed that the highest priority is to fully fund the current model. The question, she added, is what to do if full funding is not possible. Mr. Young reiterated concern that the Board may have been picking up priorities because of perceived legislative intent.

Vice Chancellor Anderes volunteered to compile a summary of what has taken place since the recommendations were first presented in December 2000. He reviewed the progress, the economic changes that have taken place, and the message that the legislature provided regarding certain programs. Ms. Lehmann pointed out that the Board hadn't changed its priorities, but was accommodating the Governor's priorities and, subsequently, the legislature's priorities, since ultimately it makes the decisions. She noted that it is important to keep in mind that the Board was responding to those requests and not that the Board had a change of heart.

OHSU

Referring to budget cuts faced by OHSU, Provost Lesley Hallick stated that a decision was made to honor all students who have been admitted and to design its cuts in ways that would strengthen its core mission. Rather than across-the-board cuts, they propose to excise other programs that are just as important, but may not necessarily be part of the core mission.

Tuition was significantly increased for dental and medical students. The allied health and undergraduate health programs were either eliminated or transferred into partnerships, referring as an example to the medical technology and paramedic program partnership with OIT and the Tualatin Valley Fire District. She stated that they will eliminate the dental hygiene baccalaureate program in the School of Dentistry, unless they can form a partnership to sustain it. They have spared the proportionate shares of the health education centers and the School of Nursing, although they have received some cuts. Dr. Hallick said the pending nursing shortage was a motivator in protecting these programs.

Rather than eliminate a site as previously discussed, OHSU has opted to modify its site at OIT where enrollment is lowest. The program in Klamath Falls will be delivered from SOU or through other means, such as shuttling, but students could come back to OIT for their clerkships.

Unfortunately, some of the services in the Child Development Rehabilitation Center have been severely cut, reported Dr. Hallick. The center is an educational program that trains health professionals to deal with children who have special health care needs.

Responding to a question by Mr. VanLuvanee, Dr. Hallick stated that the OGI merger was going well. While the merger is very different than some of the current infrastructure at OHSU, she indicated that the transition was moving along as planned.

Oregon College Savings Plan

Ms. Lehmann provided a brief summary of the Oregon College Saving Plan. She referred to a television campaign.

Oregon Council on Knowledge and Economic Development

Vice Chancellor Vines reported that Tom Imeson will serve as OSHBE representative on the council and that Chancellor Cox and Mr. VanLuvanee will serve as ex-officio members. The Office of Corporate and Public Affairs will support it. Of the newly formed group, Vice Chancellor Vines expects that appointments will be made soon.

PUBLIC INPUT SESSION

No one signed up to speak. However, Mr. Les Ruark was invited to speak to Board members later in the meeting. (see below)

ITEMS FROM BOARD MEMBERS

Ms. Wustenberg expressed a strong interest in addressing the issue of deferred maintenance. She thanked President Dow for the wonderful dinner and all the work she put in hosting the Board visit to OIT. She complimented Mr. Young for doing a great job at the public visitation session.

Mr. Young thanked the Board for the new agenda structure that allowed time for an OSA report. He expressed concern regarding House Bill 2015 and, subsequently, the uncertain future structure of higher education in Oregon.

He expressed disappointment that no students are on the search committee. In the event the search doesn't bring forth a suitable candidate, he asked Committee members to consider appointing an interim Chancellor rather than settling for a less-qualified individual.

Mr. Young expressed appreciation that the energy surcharge would only be used for current energy costs. Regarding the veterinary expansion discussion, he argued that the decision was fiscally irresponsible and reiterated his concern that politics shouldn't cloud the Board's decision-making process.

Mr. VanLuvanee announced that Mr. Ruark requested time for public input and asked if Board members objected. There were no objections.

Mr. Ruark expressed concerns about the Chancellor's search process and urged a broader public debate and questioned the need for a national search.

Mr. VanLuvanee thanked Mr. Ruark and resumed his invitation for comments from Board members.

Dr. Richmond thanked President Dow for hosting the Board and expressed appreciation for the campus setting.

Ms. Watari thanked the Board and OUS staff for being kind to her on this, her first meeting. She expressed concern regarding the OSU Veterinary School, noting that the expense of the veterinary school might be a commitment that the Board may not be able to see through. She observed that only twelve additional students would benefit and there were better ways to utilize limited resources. She pointed out that there was no precedent for an energy surcharge fee.

Ms. Watari spoke in opposition of the makeup of the Chancellor's Search Committee, pointing out that the committee doesn't represent any students, instructors, or minorities.

ITEMS FROM PRESIDENTS

President Risser stated that President Dow set the standard for the meeting and thanked her for a job well done. He welcomed President Zinser to her first Board meeting as president.

President Zinser thanked everyone for welcoming her as the new president at SOU. She expressed confidence that Oregon will rise to a new and higher level in higher education.

Several presidents highly complimented a job well done by President Dow in hosting the meetings and especially for the excellent dinner and entertainment.

DELEGATION OF AUTHORITY TO BOARD'S EXECUTIVE COMMITTEE

Board Secretary Vines read the statement pertaining to delegation of authority to the Board's Executive Committee:

"Pursuant to Article II, Section 5 of the Bylaws of the Board of Higher Education, the Board delegates to the Executive Committee authority to take final action as here designated or deemed by the Committee to be necessary, subsequent to the adjournment of this meeting and prior to the Board's next meeting, which is scheduled for December 21, 2001. This delegation includes the authority for the Executive Committee to consider and approve temporary rules necessary to implement the Boards' acceptance of joint programs between OHSU and OIT."

Board members agreed to the delegation of authority as stated.

Mr. VanLuvanee stated, for the record, that he earlier mis-spoke in referring to the planning meeting on September 28, 2001, as an Executive Committee. It was, in fact, a Special Board Workshop, which the full Board attended.

ADJOURNMENT

The Board meeting adjourned at 1:55 p.m.

Diane Vines
Secretary of the Board

Don VanLuvanee
President of the Board