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

December 10, 1999

Agenda Item 6.a.(2) - Veto Session Action Items
The Academic Improvement Trust Fund for community college foundations was legislation sought by the community colleges last spring, and it passed the General Assembly by a wide margin. The Governor issued an amendatory veto, only because it did not have appropriated dollars attached to it, and both houses accepted that amendatory veto. It was believed the passing of this bill might set a precedent because it provides the community colleges and educational foundations with the opportunity to qualify for matching grants from the state at a ratio of $2 of appropriated state funds for each $3 the community college foundation receives through private contributions. Another bill dealt with in the veto session allows the Student Assistance Commission to expand the definition of a part-time student on a program-by-program basis to include students who enroll in fewer than six semester hours of credit. That will help many students access previously unavailable financial aid funds. The state employees and vehicular liability insurance bill, which was previously discussed in this committee, is now law and requires that all state employees who are assigned a state vehicle must not only have a driver's license but must also demonstrate that they have liability insurance. The university Transportation Department will begin to implement that requirement immediately. 

Agenda Item 6.a.(3) - Update on Changes to SURS Early Retirement Option
The SURS early retirement option, dealt with extensively over the last few months by the public universities and SURS, has also received extensive General Assembly attention and discussion. Ms. Swanson asked Steve Cunningham, Associate Vice President of Administration and Human Resources, to give an update on that legislation.

Essentially, the SURS early retirement option, or the ERO program, is one that allows employees to retire under one of two primary pension code formulas — the General Formula and the Money Purchase. Those employees who retire under the General Formula before age 60 are assessed a six percent per year penalty for every year before age 60 that they retire. The ERO is a method by which the employee and the employer make contributions to the retirement system to offset the SURS actuarial costs of the employee retiring before age 60, and these payments are substantial. The payment is seven percent for the employee and 20 percent for the employer for every year the employee is less than age 60. So, in the case of a 55-year-old, these costs can range from 100 percent for the employer and 35 percent for the employee to 20 percent and seven percent in the case of a 59-year-old.

Mr. Cunningham gave a brief overview of the Mattis case, which was brought by an SIU law professor, Brian Mattis. His case stated that the value of the early retirement contributions should be included in the Money Purchase calculation, and a new calculation that included the value of those contributions should be made. In some cases that can substantially increase the benefit, whereas, before, these payments were simply made to offset or buy away a penalty that had been assessed by the retirement system. This meant, given the Appellate court decision in Mattis' favor, that a number of employees would participate in the ERO program who had not before. Earlier this year, the Board approved implementation of a 15 percent limitation in SURS ERO participation from among the eligible group of employees at NIU. A customized retirement employee counseling process has been initiated for those employees and two-thirds has been completed. At the same time, the SURS, in coordination with the universities, has developed and supported legislation to correct the SURS ERO issues in the statutes leading to the court decisions that resulted in the Mattis issue. This was contained in Senate Bill 851 in the Veto Session. It had some legislative support and came very close to passing. It will be resubmitted in the spring session. There is a lot of awareness about the issue, Mr. Cunningham said, and a genuine belief across the board by employers, employees and legislators that this needs to be clarified legislatively. A hearing was scheduled with a new judge on Monday, December 13, 1999, in the Champaign Circuit Court, which Mr. Davidson was to attend. It was unlikely that the calculation methodology would be clarified at that time.

Agenda Item 6.a.(4) - Session Calendar for 2000
Ms. Swanson went over the session calendar issued by the House of Representatives. The General Assembly has a very abbreviated session scheduled; so, the deadline for drafting of legislation will be earlier. It appears that actual legislation to be discharged from Rules Committee for consideration among the other committees in the House and the Senate will be reduced. Ms. Swanson felt that the budget would generate much of the debate during the coming session. The Governor has moved up his budget address by two weeks and will be providing his version of the budget for the State Legislature to consider on February 2. Therefore, the appropriations process will be moved up by at least two weeks. Since it will be a very quick and abbreviated session, Ms. Swanson said, we will have to respond very quickly to requests for information, etc. that the legislative staff makes during the budget process. Chair Siegel said he thought the Committee should be available for the appropriation hearings, and asked Ms. Swanson to keep them informed of those upcoming dates.

Agenda Item 6.b. - IBHE Fiscal Year 2001 Budget Recommendations
The Board of Higher Education is holding its December meeting on Tuesday, December 15, in Chicago, at which time they will be acting formally on the FY01 Budget recommendations. Northern has two projects on the Board of Higher Education's capital list for funding. The first is the Founders Library basement buildout project at approximately $4.4 million. The university received approximately a million dollars as an add-on about three years ago to begin the planning work on that project, Ms. Swanson said, and it is now ready for full funding. The NIU-Hoffman Estates expansion project is #26 on the list. This is a $20 million program, $10 million of which has been requested from the state. The value of the land at the time of the donation was $5 million, and another $5 million has been allocated from institutional resources for that construction project. NIU received $1.4 million in planning funds in the FY00 budget, Ms. Swanson said, and we are very hopeful that the Governor's budget recommendations will include the building and construction funds of $8.9 million for the new NIU-Hoffman Estates facility.

The total staff recommendation to the Board of Higher Education for capital improvements related to higher education is $403 million. The Board of Higher Education has responded to the legislature's interest in deferred maintenance by submitting a separate program using Illinois First funding, wherein the state universities and the community colleges would match state funding available through Illinois First for an ongoing ten-year deferred maintenance program. According to IBHE staff estimates, the community colleges and the public universities have a backlog of deferred maintenance projects totaling $1.2 billion. The first effort in a 10-year project is this $40 million in Illinois First funding, Ms. Swanson said. If this program continues for 10 years with the assumptions being made, they would be able to reduce this backlog to less than $50 million at the end of that time. The IBHE is asking for $3.6 million in operating budget recommendations for deferred maintenance for FY01 with the assumption that these funds will be matched with institutional resources equal to $1 for every $4 provided by the state, or a 25 percent match. The multiyear plan assumes that like amounts will be provided annually for the next 10 years. The IBHE has also made the assumption that the state will continue to invest at least $75 million annually for major remodeling projects in the regular capital budget as well as $20 million annually beginning in FY02 for capital renewal projects.

Ms. Swanson then went over a breakdown of NIU's operational budget. The staff recommendation to the Board of Higher Education represents an approximate 5.3 percent increase to the General Revenue base of the university above FY00. The tuition waiver adjustment is included in that 5.3 percent calculation. The IBHE takes an adjustment out of the general revenue funds of any university exceeding the three percent waiver. Northern Illinois University has historically made a commitment to provide assistance to students throughout the program. NIU received a $277,000 adjustment to the general revenue allocation, which brings the estimate for the total budget increase to 5.1 percent. The university was also allocated three percent in salary increases and another one percent from the state for recruitment and retention of critical faculty and staff. The request submitted to the IBHE by NIU's Board of Trustees was for a 5.5 percent salary increase. 

Program expansion funding was received in this budget for the Computer Science and Management Information System (MIS) programs, and $400,000 in expansion funding was received for health care program. This was done in an effort to address proposals sought by the Illinois Board of Higher Education to assist Illinois employers in hiring computer science, management information system and health care professionals to meet future projected shortfalls in the workforce. Proposals were sought among the universities for additional program support for these areas. The university will be able to increase the capacity of these programs by hiring additional faculty to train and teach students in these areas.

Also covered in the overall university budget was workforce development and training for diversity and academic support for diversity and retention. This Board has been very committed for several years to the issue of diversity, both at the faculty and the student level, Ms. Swanson said, and we have been on the cutting edge of many programs in this area, particularly in the development of a Center for Diversity Training as an addition to the Human Resources Office. Operational funding of $150,000 as well as program funding of $145,000 has been provided for student diversity and retention so students can receive the help they need in gateway courses that will enable them to move on into the study programs of their choice.

Ms. Swanson went over table 3-1, which showed the General Revenue fund allocation to the universities, including income funds, auxiliary enterprise funding, etc. Table 3-2 showed the income funds and other appropriated funds including General Revenue and Educational Assistance Funding allocations. Northern Illinois University will receive an overall 5.0 percent increase to the base above FY00, she said, substantially more than Southern, the University of Illinois and Illinois State. However, NIU received 5.1 percent in General Revenue funds, while Southern, the University of Illinois and Illinois State received 5.7 percent each. As the Income Fund calculations are received by each university, Ms. Swanson explained, it appears that the Board of Higher Education is adjusting the General Revenue allocations to reflect the income fund allocations and estimates for each university.

Federal Report
Family Violence Center Earmark
Through the efforts of House Speaker Hastert, Ms. Swanson reported, NIU will receive an estimated $3 million in federal support for the Family Violence Center. NIU's Family Violence Center is one of the top programs in the nation to study family violence and sexual assault. The university has received a great deal of attention not only regionally, but also nationally and internationally. Dr. Milner, who runs that program, is very active in Washington and is currently operating with several federal grants from the Navy, the Department of Defense, the Department of Justice, and the Child Abuse Prevention Fund on national and international levels. Basic research is done here, and it is used to develop the protocols and prevention strategies for many of programs used to reduce domestic and child abuse. We are very proud of this particular program, Ms. Swanson said, and look forward to its continuing growth.

Agenda Item 6.c.(1) - Teacher Certification Update – Teacher Preparation Initiative
As a result of the Higher Education Amendments of 1998, Congress mandated that universities report information on their teacher education programs, including the annual pass rates on the state licensure exams. Ms. Swanson said that agreement has been reached that the report card will include the pass rates of the institutions' graduates on all the assessments to gain entry into the field of teaching, a comparison of their pass rates to the state average, and other appropriate information on program quality. If the program has been designated as a low-performing teacher education program by the state, this information will also appear on the report card. These reports must be made to the Illinois State Board of Education by April 2000. The Illinois State Board of Education will then issue a statewide report by October 2000 to the federal Department of Education, which will also put it on their web site. The fine is substantial if the institution does not comply or make the information available in a timely manner. Additional draft guidelines, which may affect the items contained within the report card, are going to be circulated. Since there are significant concerns about the current draft guidelines that require the universities to report all of this information, Ms. Swanson has been working with the American Association of State Colleges and Universities (AASCU), which has been very involved with this issue. Because the exams are not uniform from state to state, it is very difficult to accurately report on the quality of the teacher education programs. This is an attempt at understanding this program at a statewide level, Ms. Swanson said, as well as at a national level. The Provost, the College of Education and the College of Liberal Arts and Sciences are working aggressively on this issue.

President La Tourette shared with the Board a compliment to Kathy Swanson from Ed Elmendorf, who is the chief Washington lobbyist and government relations representative for AASCU, which has a membership of about 400 universities. Mr. Elmendorf said Kathy was one of the best — probably in the top 3 or 4 — he has had the pleasure of working with from a university. We need to expand this area, because obviously we are getting some results here, Chair Siegel said, and I think we need to take advantage of that while we can.

Agenda Item 6.c.(2) - Federal Fiscal Year 2000 Labor, Health and Human Services, and Education Funding Appropriations Levels
Regarding the federal Fiscal Year 2000 budget, the Department of Education budget came in at about 6.18 percent over FY99 levels. However, the budget did contain an across-the-board cut of .38 percent to be implemented at the discretion of the individual federal agencies. The administration is recommending to the agencies that they not cut more than 15 percent of an individual program in an effort to achieve that reduction. They also are suggesting reductions be made in the programs that receive funding above the U.S. President's allocations for FY00. NIU personnel are very concerned about the Fulbright Program and were gratified to see that it was increased by $2.2 million. Many of NIU's students are on a Pell Grant, and many students in the public university system statewide are on Pell grants. The Pell Grant award went up from $3,125 per student in 1999 to $3,300 in the new budget. While it was not everything higher education had sought, Ms. Swanson said, it was above the President's request for funding the 2000 program. Seventy percent of NIU students are on some sort of financial aid, she concluded, so we watch the federal financial aid program and legislation and budget process in Washington very closely. 

Agenda Item 6.c.(3) - Higher Education Reporting Relief Act Update
This is a topic that has been discussed by the LAEA Committee extensively over the last year or so. Since the last committee meeting in June, President La Tourette, Associate Vice President Shinham and Ms. Swanson went to Washington to meet with Congressman Manzullo and the Commissioner of the Internal Revenue Service to discuss this particular mandate and the university and college response to it. At that meeting, the IRS indicated that in late July they would be willing to extend the current reporting mechanisms for one additional year as an opportunity for the university to continue to work on its computer systems, which was very helpful and appreciated. In addition, they asked if NIU would put together an advisory board with other universities across the nation and then work with them on developing these draft guidelines so they might be a little more user-friendly for the colleges and universities. Kathe Shinham led that advisory board, which has had several extensive telephone conversations, conference calls and further meetings with the IRS. The proposed regulations have now been accepted by the IRS and are under consideration by the Treasury Department. The universities will not see them until they are approved by the Treasury Department. However, they informed us they have taken some advice in the drafting of these regulations, Ms. Swanson said, so we were grateful to have had an opportunity to have Kathe Shinham lead this group of other universities and make an impact. We also appreciate the intervention of Congressman Manzullo and Speaker Hastert in those areas.

President La Tourette commented that the gender equity waiver situation applies as much to men in athletics as it does to women. In fact, until we were able to articulate that point to a number of the legislative leaders back in 1995, he said, they were not prepared to support this bill. Many institutions, like Northern, had been pushed to provide opportunities for women, which is of course quite appropriate under Title IX; but in some cases, many of the programs in the nonrevenue sports category do not have many waivers or scholarships. This legislation allowed us to move this waiver capacity to our women's program, the President said, and to release some dollars to provide more scholarships for the men's programs. So, in a sense, we not only brought up the level of support for women but for men too, particularly in the minor sports. This is very important for our program, not just an issue for women's athletics, President La Tourette concluded, but an issue for our entire athletic program. Chair Siegel stated that the university made the right decision to comply by expanding opportunities for women rather than reducing the opportunities for men.

Agenda Item 7.b. – Student Financial Aid Readiness Federal Requirement for Testing Against Department of Education System
This is a federal requirement for testing the student financial aid programs across the country at the individual institutional level against the U.S. Department of Education system. This was an amendment that was added in the last 24 hours to the FY00 Omnibus Appropriations bill. Public universities had been exempt from Y2K punitive damages related to its student education system. However, private universities wanted that exemption as well, and the legislation was changed. This bill passed on November 30, leaving very little time to test these systems. To maintain its exemption, the university had to prove that it had attempted to test the financial aid system with the Department of Education by December 20. NIU has already completed the testing of its financial aid system with the Department of Education system, Ms. Swanson reported, and is listed on their honor roll. We are very gratified that our Financial Aid Office is one step ahead of the federal government. Chair Siegel offered special thanks to the Financial Aid Office and NIU's computer group, especially John Tuecke, who has retired, and Walter Czerniak, for all their hard work in putting Northern Illinois University on the Department of Education's honor roll.

The Chair then adjourned the meeting without objection. The meeting was adjourned at 11 a.m.

Respectfully submitted,

Sharon M. Mimms
Recording Secretary