Minutes of the
NIU Board of Trustees
LEGISLATION, AUDIT AND
EXTERNAL AFFAIRS COMMITTEE

Chair Moser recognized UAC representatives Joan Greening and Donna Smith.  

The Chair said he wanted to address the Board of Trustees appointment issue and what occurred as a result of action taken in the Senate during the Veto Session.  After Trustee Raymond resigned his seat in September, Governor Edgar appointed Gary Skoien to fill the remainder of Trustee Raymond’s term through January 18, 1999.  Trustee Skoien was sworn in and served on the Board in a temporary capacity until Thursday, December 3.  Under the rules of gubernatorial appointments, appointees may serve until the Senate takes action to confirm or deny the nominations.  Trustee Skoien’s name, along with 113 other appointees of Governor Edgar, was forwarded to the Senate for confirmation.  Unfortunately, because of political issues between the Governor’s Office and the Senate majority caucus, the entire list of 114 appointees was called for a confirmation vote on the Senate floor and failed, rejecting all 114 appointees.  Therefore, Mr. Skoien’s appointment as a Trustee officially ended on that date, and Trustee Raymond’s seat will remain unfulfilled through the remainder of this term.  Governor Ryan, after his inauguration in January, is expected to put forth a list of appointees to state boards and commissions sometime next spring.  At that time, Chair Moser said, I anticipate him putting forth an appointee, not only for Trustee Raymond’s vacancy, but also reappointing the other three Board members whose terms end in January.  These appointments are subject to Senate confirmation during the spring legislative session.  Therefore, the NIU Board of Trustees will operate with seven Board members, including the Student Trustee, until such time as Governor-Elect Ryan appoints new nominees for the Board and the Senate confirms them.  Chair Moser emphasized that Mr. Skoien's appointment was not in any way rejected by the Senate on an individual basis.  Mr. Skoien was simply a victim of the political process in this case.  He is a well-liked person, respected by political and governmental leaders in Springfield, having spent the bulk of his career in state government.  We wish Gary well, Chair Moser said, and look forward to working with him.  

Agenda Item 6.a. - 90th General Assembly Veto Session Report  
House Bill 2805, which contains the trustee retention legislation necessary to allow current university board members across the state to continue serving until they are either reappointed or other appointments are made in their place, Ms. Swanson said, is moving forward quickly.  That bill is now on Third Reading in the Senate.  It is expected to pass the Senate on January 11 and go to the House for concurrence on January 12, the last day of the 90th General Assembly.  It has been agreed to by all four legislative leaders and the Governor.  Ms. Swanson felt fairly confident that having moved this far in the process, the bill would be dealt with appropriately on the twelfth so that the university governing boards could continue to operate in a seamless manner during the transition.  

Another big issue that was discussed in Veto Session was Procurement Reform.  Since the procurement legislation passed, there has been significant discussion regarding changes to the code.  That bill was very restrictive for higher education.  The end result, Ms. Swanson said, was a package with 28 areas that were deemed the most noncontroversial in this procurement bill being agreed upon by the four legislative leaders and the Governor.  Among these issues was NIU’s specific concern for legislation that would allow negotiation of our personnel contracts for continuing education.  That legislation was drafted and not only did all of the legislative leaders agree, Ms. Swanson said, but the Procurement Reform Board agreed as well as Common Cause, the interest group that has been the most ardent advocate in favor of procurement reform.  Apparently, House support for this evaporated during Veto Session and the package was not moved.  It appears that it will not be moved on January  12, Ms. Swanson continued, and we will begin trying to address some of these issues in the new General Assembly.   

It appeared there would be no FY99 supplemental budget because the legislative leaders, the Governor and the governor-elect could not agree on what would be considered emergency funding in a supplemental.  Therefore, Ms. Swanson said, there probably will not be a supplemental budget until between February and late April under the new governor.  A schedule for next year’s legislative session, which showed both House and Senate deadlines, was distributed to the Board by Ms. Swanson.  

Agenda Item 6.b. - SURS Retirement Enhancement Initiatives  
Ms. Swanson asked Steve Cunningham, Associate Vice President, Administration and Human Resources, to give the Committee a brief report on retirement issues.  Mr. Cunningham stated that a lot of time was spent discussing the significance and the willingness on the part of legislative leaders to participate in a “5+5” program for state employees during Veto Session.  It allows employees to retire at age 50 with a minimum of eight years service credit and the same penalty provisions as retirement at age 55.  That moves the distribution for retirement eligibility downward by up to five years, Mr. Cunningham said, and then corresponding additions of service credit in age are given to the individuals who wish to participate. This would result in additional contributions to the retirement system due to the statutory requirement of obtaining 90 percent funding ratios for unfunded liabilities that amount to $4 billion over the 40-year actuarial period.  It is a very expensive initiative that would cost higher education approximately $666.8 million and would have the effect of obligating resources in the higher education budget that would otherwise be available for other priorities, including compensation increases.  The single best retirement enhancement program is an active compensation increase program.  Other framework changes to the SURS program would be applicable to all employees instead of a relatively small number of employees and other priorities.  For this reason, higher education was unanimous in having alternative measures in the event that a “5+5” became active for the rest of the state, including compensation priorities and a possible pick-up of part of the employee contribution to the SURS.  It looks like the “5+5” initiative is not viable at this time, Mr. Cunningham said, but we will continue to monitor it closely.  

Agenda Item 6.c. - Higher Education Act Reauthorization of 1998  
Ms. Swanson brought the Committee up to date on two significant pieces of federal legislation.  The first was the Higher Education Reauthorization Act of 1998, HR6, which is a national piece of legislation that affects all colleges and universities across the country.  There were a couple of provisions in it on campus crime reporting that will have an impact on how business is done at Northern and at every other school as far as what types of crimes have to be reported to the federal and state levels, including manslaughter and arson.  In addition, some changes were mandated on keeping the daily logs of incoming incident reports.  The Federal Educational Rights and Privacy Act (FERPA) was amended to allow but not mandate institutions to release information on students involved in disciplinary activities on campus as long as the offense is nonviolent in nature.  NIU's police department and judicial office are looking into what the ramifications of that act would be for them.  

There are a couple of issues that were not addressed in the Higher Education Reauthorization Bill, Ms. Swanson said.  One was that higher education as a national lobbying entity had pursued legislation that would allow students to consolidate their loans at a low interest rate for at least a year.  Unfortunately, the committee agreed that they would only open the process for four months.  There were some bankruptcy law issues in regard to student loans that were also addressed by the national lobbying groups of higher education.  There is a sense at the national level that these new reporting requirements, particularly the campus crime and teacher preparation issues, will prove burdensome for the campuses.  There will probably be an effort next year in Washington to try to obtain some relief from these issues.  

Agenda item 6.d. - Taxpayer Relief Act and University Reporting Update  
Ms. Swanson updated the committee on the Taxpayer Relief Act and the university reporting issue, which Northern has been particularly active on at the federal level.  Congressman Manzullo of Rockford introduced legislation that would exempt institutions of higher education from the reporting requirements and allow taxpayers to be responsible for maintaining their own records on what they pay in tuition and dealing with the IRS directly, taking the institutions out of the middle-man role.  The legislation picked up a significant amount of cosponsorship, with roughly 25 percent of the House of Representatives signing on and about 20 percent of the Senate.  However, the legislation did not move forward, and it will have to begin again in January when the new Congress is sworn in.  It was believed that the legislation would gather continued momentum in Washington because as these reporting requirements are phased in more universities and community colleges will become aware of the tremendous financial impact this would have on their operations.  Estimates given were from about $2.65 per every enrolled student to as much as $9 a student.  There is a significant range of costs, depending on the key question of what type of student is considered.  Will 'students' include noncredit continuing education students, or are students only those pursuing a baccalaureate or a graduate-level degree?  These questions have been and remain unanswered at the federal level by the Treasury Department.  However, after seeing the growing number of legislators and congressional representatives who support this legislation, the Treasury Department made significant changes in the new requirements for this year.  The requirements are much less than originally thought; however, the lesser reporting requirements will be in effect during 1998 and 1999 only.  After 1999, the requirements are scheduled to go back to what was in the original legislation, which is significant.  Even though these basic requirements are less than what was provided for in the original legislation, Ms. Swanson said, once they take effect at the end of this year, and universities and colleges have to send out these notices to the families, I believe there will be a significant protest.  If that is the case, there will probably be some relaxation next year, either through the legislation or through further Treasury Department notifications and bulletins.  

Agenda Item 6.e. - Flood Loss Recovery  
At the last Committee meeting, an inquiry was made on where the university was in receiving the federal funding reimbursement for the flooding experienced at the university in 1996.  Ms. Swanson reported that the university had received just under $300,000 to date from the Federal Emergency Management Agency.  That amount represents approximately 25 percent of the actual damage.  One outstanding issue with FEMA is the loss of a record album collection at the Broadcast Center that was valued between $23,000 and $36,000.  Ms. Swanson said the university should hear from FEMA on that item in the next month or two.  

Turning to the budget presentation that will occur next week, President La Tourette said, I might characterize it as a very aggressive budget presentation in terms of the level of the request being made.  During the Edgar administration, the requests were limited more or less by agreement between the chair of the Board of Higher Education at that time and the Governor to six percent or less.  Even when a six percent increase was recommended, typically the increases for the public universities in the overall package for public higher education amounted only to three or four percent.  That always caused a misunderstanding on the part of those in the legislature.  They would look at the total package and think the universities had received the six percent they had requested.  But looking at the bottom line for public universities at that time, the President said the increase was always below four percent, in many cases hovering around three percent because a lot of the increase money was going to other parts of higher education such as the retirement system and the HECA program (financial aid and grants that encourage cooperation between and among universities and colleges).  We are breaking new ground here, President La Tourette stated, and I think it is very important to realize that the executive director of the Illinois Board of Higher Education, Dr. Sanders, is trying to articulate as forcefully as possible, the educational needs for the state in general, but particularly for higher education, to make the point that the state needs to have a highly skilled work force, technologically oriented and comfortable with technology in order to be competitive in the future.  This is his effort as it has appeared in the Citizens Agenda.  The recommendations the IBHE executive director would be presenting to his board ran in the 7 percent to 7.5 percent range, considerably higher than has been seen since 1989-90 when Governor Thompson and the legislature made a temporary tax increase permanent.  In this proposal is a basic three percent salary increase along with one percentage point to be matched by the universities to help make Illinois higher education more competitive in the national market, making the overall package a five percent salary increment.  The President emphasized that the one percentage point match was already in the bank and would come from reallocated funding from NIU's enrollment dividend.  Also for the first time, funding was to be recommended at three percent for general cost increases, three percent for utility increases and ten percent for library increases.  It has been a number of years since we have had the general cost increases recommended for the universities, the President said.  We have been absorbing these price increases.  

Trustee Moser asked about the $10 million listed for the Hoffman Estates Education Center.  Dr. Williams stated that aspects of the established project budget were internal financing, a matching portion and the land value.  The total project should be in the range of about $20 million if the land value is considered, Dr. Williams said, and the design budget would be in the range of about $15 million.  President La Tourette added that the same procedure used with the original Hoffman Estates building would be used for this building.  Additional programs will be offered that will generate revenues needed to cover another $5 million of amortization.  With the total offering, the land, the university's reallocation and the revenues we can generate as a result of offering programs there, the President said, the university can request a state match of $10 million.  I think the Illinois Board of Higher Education now realizes that there is a lot of education demand that cannot be met on campus and will be more willing to help us in this kind of matching.  With the good cooperation we are getting, Chair Moser said, we really look forward to moving ahead with that project.  

The Chair asked for a motion to adjourn.  Trustee Siegel so moved, seconded by Chair Moser.  The motion was approved.  The meeting was adjourned at 11:42 a.m.  
  
Respectfully submitted,  

Sharon M. Mimms  
Recording Secretary