Minutes of the
NIU Board of Trustees

LEGISLATION, AUDIT AND
EXTERNAL AFFAIRS COMMITTEE

November 25, 1997

CALL TO ORDER AND ROLL CALL 

The meeting was called to order by Chair George Moser at 1:05 p.m. in Room 244 at the Hoffman Estates Education Center of Northern Illinois University. Recording Secretary Sharon Mimms conducted a roll call of Trustees. Members present were Trustees Manuel Sanchez, Myron Siegel and Chair Moser. Also present were Committee Liaison Kathy Swanson, Board Parliamentarian Kenneth Davidson and President John La Tourette. Noting the presence of a quorum, the meeting proceeded.  

VERIFICATION OF APPROPRIATE NOTICE OF PUBLIC MEETING 

Confirmation of Open Meetings Act notification compliance was given by Board Parliamentarian Ken Davidson. 

MEETING AGENDA APPROVAL 

Chair Moser revised the agenda, moving Agenda Item 7, Other Matters, to Agenda Item 6.b and renumbering the remaining items 6.c. through 6.f. Trustee Sanchez moved for approval of the agenda as amended, seconded by Trustee Siegel. The motion was approved. 

REVIEW AND APPROVAL OF MINUTES OF JUNE 12, 1997 

A motion was made by Trustee Siegel and seconded by Trustee Sanchez to approve the meeting minutes of June 12. The motion was approved. 

CHAIR’S COMMENTS 

Chair Moser recognized University Advisory Committee members Jim Russell and Gordon Shneider. Mr. Shneider said that both faculty and staff recognized and appreciated the efforts the Board and staff have made, particularly those issues dealing with pension and retirement. He said that State-paid health insurance for annuitants, on which Kathy Swanson and others had been working, was of great interest to university employees, and it was hoped that they would continue to support it.  After Chair Moser welcomed the Committee back to the Northern Illinois University Hoffman Estates Education Center, he introduced Hoffman Estates Mayor Mike O'Malley. It was because of his efforts on behalf of NIU through the years, Moser said, that Northern was able to have the facility in Hoffman Estates. We are all very grateful, Mr. Mayor, and will need your continued help in the future, Chair Moser said, as we seek to expand the Center to accommodate the increasing demand for off-site coursework here. Mayor O'Malley said that NIU coming to Hoffman Estates was good for NIU and for Hoffman Estates. Because the facility enrollment maxed out in the first year, there is a dire need for expansion. The Mayor said he supported that expansion wholeheartedly because it was good for the residents of Hoffman Estates Village and the community as a whole. 

Since their last meeting, Chair Moser said, the Governor had approved the Committee's main legislative initiative, Senate Bill 770, the NIU Land Utilization legislation, which will permit the university to be more creative and entrepreneurial in the development of designated areas of vacant land owned by the university. This legislation designates over 289 acres of vacant land as a development zone, most of which is already owned by the university. It provides the Board of Trustees with the flexibility to meet the changing needs of the future of the Northern Illinois University students for the next 25 to 35 years. Public and private partnerships are not merely allowed, but are encouraged in this legislation. In an era of limited state resources available to meet ongoing and future capital needs at Illinois' public universities, Chair Moser said, I am proud to have worked with this Committee and the Board to obtain the Governor's approval on this landmark legislation. Besides Northern Illinois University, only UI-Chicago has this authority. 

UNIVERSITY REPORTS 

Agenda Item 6.a. – NIU Land Utilization Policy Resolution  At the Board of Trustees June, 1997 meeting, the Board passed a resolution requesting that administration develop a specific plan for coordinating projects within the specified development zone contained in Senate Bill 770. Agenda Item 6a, is the university's response to that request. After reviewing the policy implementation resolution, Chair Moser said, I want to commend President La Tourette, Vice President Eddie Williams and Kathy Swanson for their work in drafting such a comprehensive response. He then asked Committee Liaison Kathy Swanson to give a report on Senate Bill 770. 

Ms. Swanson stated that in each packet was a policy implementation resolution, which would answer Board requests at the June 12 meeting for university administration to develop a response to house specific projects within this development zone from the conceptual stages to the actual construction and completion stages. Ms. Swanson asked Vice President Eddie Williams to brief the Committee on these aspects of the resolution. 

The plan itself, Dr. Williams stated, has four major components. (1) An oversight team composed of the Chair of the Board, the Chair of the Finance and Facilities Committee, and the Chair of the Legislation, Audit and External Affairs Committee would be established. This oversight team would work with the university in reviewing long-range and short-range plans, and would be directly involved with review of all proposals submitted, allowing the Board a hands-on presence in all of aspects of the development of the property. (2) The Board would also delegate to the President of the university the responsibility for pulling various proposals together. In carrying out this responsibility, the President may call in external experts to provide additional information. The President can also carry the issue before faculty, staff, students and other individuals having specific expertise or interest in the specific proposal. (3) The Senior Vice President for Finance and Facilities will be responsible for reporting periodically to the Finance Committee regarding the progress and the status of any particular projects or the overall development of the property. These reports will be subject to and pursuant to the oversight team being directly involved in reviewing and making comments relative to any and all proposals being considered. (4) Two certifications that were felt to be critical were also included in the proposal. The first certification would be made by the Senior Vice President for Finance and Facilities, who would certify that proposals being considered and brought to the Finance Committee or the Legislation Committee are pursuant to all Board of Trustees policies and consistent with all state procurement requirements and any other regulations that might apply to this type of transaction. The second certification would come from the Associate General Counsel, who would certify that the transactions being recommended or reviewed by the Board adhere to the Board of Trustees Conflict of Interest Policy. These two certifications, as well as the proposals, after review and concurrence of the oversight committee, would be sent to the Finance and Facilities Committee and then to the full Board. Trustee Sanchez said that he was very impressed if he was correct in assuming that this is a paradigm set by NIU. Dr. Williams said that to his knowledge, only the University of Illinois-Chicago and Northern Illinois University have bills that allow this type of action. However, he said, pursuant to the Chair, this committee and the directives handed down on oversight, NIU's response was believed to be unique in the state. 

Trustee Siegel asked for an explanation of the phrase "with the concurrence of the oversight team" in the second paragraph. Dr. Williams said all matters pertaining to this land utilization would be brought to the attention of the oversight team so there would be a collective effort in the development and to make sure there is full disclosure and involvement of the oversight team in the steps taken. 

Chair Moser welcomed State Representative Terry Parke as another strong NIU supporter, and asked if he would like to say a few words. Rep. Parke said that his wife is in a master's program at Northern and they feel very good about what the Board and the university are doing, not only at Hoffman Estates, but in DeKalb and other locations. He encouraged the university to continue to define strong programs. We will do whatever we can do to encourage and assist you in expanding the programs you are providing for this area, Rep. Parke said. NIU is an outstanding university, he said, and more students should have the opportunity to attend the university. 

Chair Moser thanked Rep. Parke and said he hoped NIU was meeting the needs of the students. He said that the Legislation, Audit and External Affairs Committee, as part of the Board, had decided to have at least one meeting a year in Hoffman Estates in an attempt to bring it closer to DeKalb and vice versa. Chair Moser asked for a motion to endorse the land utilization resolution. Trustee Siegel so moved, seconded by Trustee Sanchez. The motion was approved. 

OTHER MATTERS 

Agenda Item 6.b.(1) – Intergovernmental Payroll Agreement  Steve Cunningham, Associate Vice President for Administration and Human Resource Services, spoke on the proposed intergovernmental payroll agreement with the State Comptroller's Office to allow the university to process appropriated payrolls. Since about 1972, the university has been required to provide data to the Comptroller's Office for processing and they would then distribute the payrolls from the office in Springfield. That created a number of problems, Mr. Cunningham said, in data processing, transportation of payroll warrants and vouchers, and employees who were paid from both nonappropriated and appropriated accounts receiving multiple W-2 forms. The Comptroller's Office is willing to work with the universities to set up a program under which appropriated payrolls would be processed at the university level. They will then transmit the funds into the appropriate accounts on or before the payday. The university requested endorsement of the intergovernmental agreement. Trustee Sanchez so moved, seconded by Trustee Siegel. The motion was approved. 

Agenda Item 6.b.(2) – Amendment to Board Regulations II.D.12. and III.C.14. (Tuition Waiver Programs for Employee Children) 

The university was active in passing this legislation, which will necessitate a change in Board Regulations to conform with State statutes. NIU subsequently coordinated the statewide implementation of the policy. Public Act 90-282, the interinstitutional tuition waiver law, represents a significant expansion of tuition waiver benefits for university employee children. The amended waiver applies to an employee with seven or more years of service with a child less than 25 years of age, who has been admitted to the university and remains in good academic standing. This new law extends the entitlement for the children of employees with seven years or more to all of the public universities in Illinois and is a considerable expansion of the policy. 

Trustee Siegel asked if Mr. Cunningham could give him an incremental cost estimate of the program. Mr. Cunningham said that none of these waivers are charged against our annual IBHE allocation. A relatively modest increase is anticipated in waivers across all of the universities. Statewide, the cost was estimated at less than $300,000. Chair Moser asked for a motion to endorse Board Regulations II.D.12. and III.C.14. and forward them to the full Board of Trustees for approval in its December meeting. Trustee Sanchez so moved, seconded by Trustee Siegel. The motion was approved. 

Agenda Item 6.b.(3) – Amendment to Board Regulations II.D.6. and III.C.2. (Accumulative Sick Leave) 

Another change in Board Regulations that is required for conformity with State statutes relates to the pension enhancement legislation, which was Public Act 90-65. The content of that legislation was discussed in previous committee and Board meetings. There were two especially noteworthy benefit changes associated with that legislation. One was the change in health insurance coverage for annuitants, and the other was the elimination of what had formerly been authorized by statute for compensable sick leave. Currently, employees accrue sick leave at the rate of one day per month and the accruals are unlimited. Those days can be used at termination for service credit under the Retirement System or for payout of unused sick leave earned after January 1984. The new law eliminates compensation for that unused time as of December 31, 1997 but leaves all other provisions intact. Both the statute and the Board Regulations change will provide that employees use the noncompensable sick leave first, if available, thereby preserving the payable sick leave to the maximum extent possible. The university asked for concurrence with the amendment to Board Regulations II.D.6. and III.C.2. Trustee Siegel so moved, seconded by Trustee Sanchez. The motion was approved. 

Agenda Item 6.c.(1) – HOPE Scholarship/Lifetime Learning Tax Credits 

Ms. Swanson said the HOPE Scholarship and Lifetime Learning Tax Credits would result in a substantial cost to the university in 1998, and in subsequent years, to comply with a program which is, conceptually, a very good program at the federal level. The HOPE Scholarship, initiated by President Clinton and Congress, provides a tax credit of approximately $1,500 per student for college tuition reimbursement on a sliding adjusted gross income scale for community colleges and universities, both public and private. The HOPE Scholarship is applicable for the first two years, followed by a Lifetime Learning Credit, which is approximately $1,000 per student for those in their third and fourth years of higher education, depending on the type of program the student is in. The Department of the Treasury and the Internal Revenue, Ms. Swanson said, have been discussing a requirement that would affect every community college, university (private and public), and college across the country. The IRS will require that colleges and universities maintain the taxpayer's social security number (not just the student's social security number); a record of whether the student was enrolled for at least half time in any particular academic period; the gross amount of tuition and related fees each student is expected to cover, minus the tuition remission; any tuition remission adjustments; and, whether each student has completed two years of postsecondary education, all data not currently maintained on students. To comply with this request, it is anticipated that the cost to the university will be several hundred thousand dollars in 1998 alone. 

We are now trying to work with our other Illinois institutions as well as our lobbying arms in Washington, Ms. Swanson said, to support the concept of the HOPE credit, but to go back to Congress next Spring and ask them to clarify that this issue should be between the taxpayer and the IRS — similar to medical bills, property tax deductions, and child care exemptions — and that the colleges and universities should not be required to collect data that would necessitate a reconfiguration of many Bursar's offices and many computer databases, particularly faced with Year 2000 compliance. 

Ms. Swanson asked Kathe Shinham, Associate Vice President for Finance, to discuss the implementation issues in greater detail. Ms. Shinham said that this is an excellent program that will benefit students who could not previously qualify for any tax credit programs. However, the cost of implementing it will be very high, Ms. Shinham said, because, unfortunately, all the things that are problematic are written into the law. So it is not a case where the IRS can change its requirements because it will cause a lot of work and cost a lot of money; the law would actually have to be changed in order to change the way that the universities would respond to it. 

For 1998, Ms. Shinham anticipated that implementation would be fairly easy for the university. The university would have to supply the name, social security number and address of the student; Northern Illinois University's tax identification number and address; and designate a contact at the university. Student status on whether or not the student was enrolled at least half-time and whether or not the student was enrolled exclusively in graduate courses would also have to be reported. The reason for the latter request is so they can differentiate between students who are eligible for the HOPE Credit versus the Lifetime Learning Credit. 

Implementation in 1999 will be more extensive. The universities asked if the IRS could tie the student's social security number with the taxpayer's social security number when returns are filed. The IRS said no. As a result, the universities will have to collect a substantial amount of data on the student, which can change from year to year while enrolled at Northern, as well as information on the person claiming the exemption. Since many students come from single-parent homes, sometimes parents alternate. One parent will get a deduction for that dependent one year, and the next year the other parent will. There are also situations where one parent will get the exemption while the other parent pays the tuition. It is something that will have to be updated continually. There are a lot of things that need to be worked through and that parents will have to plan for. The university will have a form that will be sent to all students for data collection. The system is being revised so that enough data can be maintained to cover the entire tax year. Right now, Ms. Shinham said, there are three terms of billing and payment data in the system. This will have to be expanded because Spring billing is done prior to the end of the calendar year. Mailings will be sent out to students to verify data already in the system and to transmit information on what can or cannot be used for the credit. There are also multiple billing entities on campus that do not go through the Bursar's Office. As a result, data will have to be obtained from each of those areas and merged into the main student billing system to do the proper tax reporting. 

Veto Session Synopsis 

Agenda Item 6.d.(1) –Capital Issues 

Ms. Swanson said the Governor would be convening a special session of the legislature on December 2. The two issues to be discussed were the education reform bill and the supplemental budget, which included the funding for Altgeld Hall. Ms. Swanson was very optimistic funding would be approved. 

Agenda Item 6.d.(2) – Procurement Legislation 

Ms. Swanson reported that a procurement bill passed the General Assembly and was awaiting the Governor's signature. She asked Jim Harder, Vice President for Business Services, to make a brief presentation on the implementation problems the legislation will cause the university. The implementation of this legislation, she said, might require the university to completely reconfigure its purchasing area. 

Mr. Harder briefly explained the major provisions of the amendment to House Bill 1633. The Public Policy Statement says that "It is the purpose of this code and is declared to be the policy of the State that the principles of competitive bidding and economical procurement practices shall be applicable to all purchases and contracts by or for any State agency." It establishes a Procurement Policy Board, which will have the authority and the responsibility to review, comment upon, recommend and determine, consistent with the Code, how the State will procure services. The board will consist of five members, one appointed by each of the four legislative leaders and the Governor. The chief procurement officer will be appointed by the Governor. The director of each State agency will approve a State purchasing officer to exercise his or her jurisdiction for the procurement authority created by the code to work with the chief procurement officer. This means that the NIU Board of Trustees would designate someone as the State purchasing officer to work with the chief procurement officer. Higher education will have its own chief procurement officer as will the Capital Development Board, IDOT and CMS. There will be a Procurement Bulletin published. The higher education bulletin will be the responsibility of the chief procurement officer for higher education. The bulletin will include invitations for bid and disclosure of contracts to be let or awarded. There are provisions for emergency purchases. The ceiling for sealed bids has been lowered from $25,000 to anything exceeding $10,000. 

Mr. Harder stated that there are provisions for sole procurements. Part of the legislation deals with the procurement for professional and artistic services. The chief procurement officer and the procurement board will have to develop rules for this along with rules about real property and capital improvement leases. There are preferences designated in the legislation to deal with a whole variety of preferred vendors, small businesses, minority, female and disabled vendors as well. There is a section dealing with concessions, which gives the public institution of higher education the right to enter into concessions, such as assignments, licenses, sales, transfers of interest, etc. The effective date of this legislation is January 1, 1998 for the procurement board. The rules relating to purchases become effective July 1, 1998. 

Ms. Swanson said there are several problems with this legislation. She asked the Board to think about the separate procurement board being created and the chief procurement officer being named for all of higher education who will open all RFP sealed bids, record them and then forward them to the institutions. An interesting part of this legislation, she said, is that the community colleges were exempted. In answer to a question from Chair Moser, Ms. Swanson said that she had received a clear indication that the Governor would be signing this legislation very shortly. The procurement board was scheduled to take effect the first of the year and the new rules would take effect on July 1. The university will use the next six months to work with the legislature to initiate some trailer bills for next spring to try to address some of the remaining issues not only in higher education, but across the state. 

Chair Moser thanked Mr. Harder, on behalf of the Board of Trustees and this committee, for the many years of service he had given to Northern Illinois University and for the privilege of working with him over the past two years. He wished the best to Mr. Harder and his wife for his upcoming retirement. 

Agenda Item 6.d.(3) – Retirement Issues 

The university's FY99 budget request had been sent to the Board of Higher Education. They were expected to announce their official budget recommendation at the January 6 IBHE Board meeting. The IBHE will then send their recommendations to the Governor's Office. The Governor has scheduled his budget address for Wednesday, February 18. Ms. Swanson said she and other university people were meeting with the Governor's Office to communicate the university's specific priorities and concern over obtaining the 5.5% in personnel services. They were also meeting with legislators, IBHE Board members, IBHE staff and the Governor's Office to closely track the personnel services item through the budget process. 

Agenda Item 6.e.(2) – Advanced Photon Source 

Ms. Swanson briefed the Committee concerning the Advanced Photon Source (APS) issue. Northern Illinois University, along with Southern Illinois University, the University of Illinois, the Illinois Institute of Technology, Northwestern University and the University of Chicago, have received grants from federal, state and industry sources to study synchrotron radiation research. These six institutions received a grant through HECA (Higher Education Cooperation Act), funded at $2 million per year for the last five years, with this year being the last year of funding. The universities have met with the Governor's Office to request additional five-year funding at $3 million per year. Ms. Swanson then asked Dr. Clyde Kimball to speak about the accomplishments of the research over the last five years. 

Dr. Kimball explained that the Advanced Photon Source is an x-ray approximately 10,000 times more intense than any other individual x-ray available. The APS is so intense that it allows chemical reactions to be monitored stroboscopically (stop-motion observation over a period of time). Dr. Kimball further explained that applications have been extended to sciences beyond physics, including chemistry, geology, biology, medicine, micromanufacturing, genetics and geophysics. Dr. Kimball went on to explain that it is vital that the state continue this grant program. 

Agenda Item 6.e.(3) - Hoffman Estates Education Center Enrollment Update 

The Chair asked Mare Streicher, Coordinator, Credit Programs and Services, to give an update on the enrollment situation at Hoffman Estates. Ms Streicher stated that the majority of credit offerings were at the graduate level. Degrees that can be completed at Hoffman Estates include the Masters of Business Administration, Masters of Science in Nursing, Masters of Science in Computer Science, a number of Masters of Education programs, as well as the newly approved Masters of Science in Taxation, Masters of Public Administration and Masters of School of Business Management. Additional course offerings are available in other areas as well. 

Hoffman Estates serves 4,000 students per year and offers more than 80 classes each semester. Classes are held primarily at night and on Saturdays, while during the daytime hours, the Center functions as a conference center for the business community. 

Ms. Streicher stated that the Hoffman Estates Education Center (HEEC) has not only fulfilled the University's expectations, but exceeded them in most respects. Chair Moser asked Ms. Streicher about the utilization of the Center during the daytime hours. President La Tourette explained that daytime rental of the facilities provides approximately two-thirds of the operating expenses at HEEC. He further explained that currently there is a need for not only additional space for meeting, but additional parking spaces to accommodate those who use the Center. 

NEXT MEETING DATE 

The Committee will be notified of the next meeting date.

There being no Other Matters, Trustee Sanchez moved for adjournment. Trustee Siegel seconded the motion. The motion was approved. The meeting was adjourned at 2:42 p.m.  

Respectfully submitted, 

Sharon M. Mimms 
Recording Secretary