Minutes of the
NIU Board of Trustees
Legislation, Audit and External Affairs Committee

September 6, 2000

The meeting was called to order by Chair Myron Siegel at 9:15 a. m. in the in the Capitol Room of Holmes Student Center. Recording Secretary Sharon Mimms conducted a roll call of Trustees. Members present were Trustees Jeremiah Joyce and Gary Skoien and Chair Myron Siegel. Also present was Board Parliamentarian Kenneth Davidson and President John Peters. With a quorum present, the meeting proceeded.

REVIEW AND APPROVAL OF MINUTES
It was moved by Trustee Joyce and seconded by Trustee Skoien to approve the minutes of the June 5, 2000 meeting. The motion was approved.

The center does basic research in the area of family violence and sexual assault. Dr. Milner stated that in the last ten years the center had generated over 150 scholarly publications on its various research projects. The center is funded almost continuously, he went on to say, by grants from the National Institute of Mental Health. The center also has a $3 million grant from the Department of the Navy for a seven-year project, which may have some national visibility soon.

Dr. Peters thanked Professor Milner and said that this funding would not have happened without his expertise and hard work and that of his associates. This grant obviously positions us to be one of the leading research centers in family violence in the country. The President also thanked Speaker Hastert for his help with this project. In answer to a query from Trustee Skoien, Dr. Williams said the center would be approximately 20,000 gross square feet.

Ms. Buettner asked the Committee to endorse the recommendation for design and construction of a new facility on the West Campus in DeKalb for the Center for the Study of Family Violence and Sexual Assault. Funding for such facility to be received from HRSA in a construction grant totaling $2,718,592. The University further requested authorization to establish a budget of $2,718,592 for design and construction of such a facility. The university also requested authorization to initiate QBS (Qualifications Based Selection) process for selection of an architect to prepare plans and specifications for bidding and provide construction observation. Further authorization was requested to seek and take bids, execute construction contracts and issue work orders as necessary to design, construct and occupy the facility. Chair Siegel asked for a motion to endorse approval of the Center for Family Violence and Sexual Assault project. Trustee Joyce so moved, seconded by Trustee Skoien. The motion was approved.

Agenda Item 6.a.(2) - Tax Relief Act of 1997-Status Report
Ms. Buettner reported that Northern Illinois University has made significant progress in building a coalition with other universities and our Illinois delegation, particularly with Congressman Manzullo and Speaker Hastert, in prompting the Internal Revenue Service and the Department of Treasury to issue proposed regulations.

Ms. Buettner recognized Ms. Kathe Shinham to provide the committee with a technical update. Ms. Shinham said the universities are all drafting comments to the IRS in cooperation with Congressman Manzullo, which are due on September 14. The biggest issue was reporting the taxpayer’s social security number. Additionally, implemented in the permanent regulations, Continuing Education courses do not have to be reported, which is very significant. Also, we do not have to report on nonresident aliens unless specifically requested. Very specifically, the IRS has said we must report the amount of tuition and eligible expenses paid by the student. Matching payments to the amounts billed, capturing that and reporting it on the return will take some programming effort. We will be reporting scholarships and grants that are eligible to cover those expenses, Ms. Shinham said. The IRS will likely use these at some point in the future to find out why some of our students are not reporting them as income. The other issue is capturing refunds. This is really a national issue in that most billing systems do not know why you are giving a refund. Was it loan proceeds that were not needed to cover the cost of attendance? Or was it just excess aid? Was it the fact that you dropped a course? And they want us to report refunds of qualified tuition and fees. That is the point that we will be arguing very specifically in our response to the IRS. Overall, I think the universities are encouraged with the change in the proposed regulations from the current regulations. It is a significant improvement. I think it is the result of Congressman Manzullo, Kathy Buettner and John La Tourette arranging this meeting with the IRS Commissioner, Ms. Shinham concluded, and we were able to follow that up with a good representation of universities nationally.

Chair Siegel recognized Rep. David Wirsing. The Chair said the committee would like to hear the Representative's comments on the public comments section of the Regulations later in the meeting.

Agenda Item 6.b.(1) - Public Comments at University Board Meetings
House Bill 2580 passed the General Assembly and was signed into law by the Governor. It has an effective date of January 1, 2001. This law requires that university governing boards statewide provide for public comment in their bylaws in a less restrictive environment than has been indicated in some university governing board bylaws in the past. This was a law that applied to all governing boards universally. We are attempting to change the NIU Bylaws to reflect the sentiments of the law, Ms. Buettner said, and the Board will vote on them at the December 7 meeting. This is a first draft proposal for the Committee’s and the Board’s consideration, she said. Basically, it attempts to provide for a reasonable and orderly process for public comment at both the committee level and at the governing board level when the full Board meets quarterly. A form similar to that used to testify before the House and Senate committees would be developed that would allow a person to simply state their name, their department or their address and phone number, and what agenda item or nonagenda item they would like to address with the Board. If a person does not wish to address the Board, s/he can simply be put into the record as having appeared on that issue before the Board without necessarily making an oral presentation simply by checking a box that says "Record of Appearance Only." This provides for written comments to be accepted by the Board in place of oral comments. It also will allow the Parliamentarian and the Committee Chair and Board Chair respectively at each meeting to put these slips in proper order to allow comments on similar subject matter to occur at the same time in a manner that allows for an orderly process in the meeting. Discretion is left to the Committee Chair and to the Board Chair for time allotment based on the agenda, the number of inquiries and the number of requests for appearances to speak. There is also a sentiment in the Bylaws that we tried to interject in this draft form, Ms. Buettner said, that would encourage people to use the committee process to offer their comments. When the Board meets in full, they are usually acting on items that have been endorsed by the Committees. So, the proper place to have the maximum impact on an issue that is before the Board for consideration is at the committee level, she said, and we tried to indicate such in the draft Bylaws changes before you today.

Chair Siegel asked if UAC had any comments on the proposed changes. UAC Representative Judy Burgess asked if the process would permit verbal comment or if it would provide for written comment only. Chair Siegel stated that as the regulations are proposed, UAC could appear at any of the Committee meetings and make a request to speak. My concern with the proposed regulations we are trying to work through, Chair Siegel said, is to make sure that we allow reasonable time, but have some mechanism in place that will not overwhelm the various committees. The Chair asked Rep. Wirsing if he could perhaps give them some guidance on how this issue is handled the House of Representatives.

I do not want to be considered an expert here, Rep. Wirsing said, but the chair is in charge from a parliamentary process. The chair can establish what those ground rules are for that particular day and that particular meeting. School boards have done that for years. Many school boards have a three- to five-minute time limit so you know that in advance and prepare for it. If you have 40 people on a particularly exciting issue, then the chair can ask for representation of the 40. The group can decide who is going to speak. The other 39 would file the paper slip that says "Appearance, and I support or oppose" or whatever comments.

Chair Siegel read proposed paragraph B.4., which states that "The Chair may limit time allotments and delay or defer appearances when appropriate." He asked if that would suffice or if the language should be changed to something a little more broad. Trustee Skoien thought it should be broadened to give the chair authority to oversee the orderly conduct of the meeting, provided it allows people to give the required input. Chair Siegel asked Parliamentarian Davidson to make some change to paragraph 4 to broaden the discretion of the appropriate chair of the committee or the Board. Mr. Davidson said it also would be suitable to include that language in the protocols that would be available for interested parties. Trustee Siegel agreed that everyone should be aware of the rules under which the Board would be operating. The staff did a very good job of putting into words what I understand is already the practice here, President Peters said, particularly in the committee meetings.

Chair Siegel asked for a motion to endorse this language with the modifications that the committee had directed Mr. Davidson to make. Trustee Joyce so moved, seconded by Trustee Skoien. The motion was approved.

Agenda Item 6.b.(2) - SURS Early Retirement Legislation
The Illinois General Assembly approved a phase-in 30-and-out provision for SURS several years ago, Ms. Buettner said. The sunset date is 2002 on that provision, and the General Assembly needs to act in order to continue it. It appears at this point that there will be legislative action on pension issues as a result of the "Rule of 85" for the code agency employees. Ms. Buettner asked Steve Cunningham to update the committee on this legislation.

In 1997, Mr. Cunningham said, we reported on a comprehensive enhancement of the SURS system, which involved moving to a 2.2% general formula calculation revision of the actuarial assumptions under SURS. It brought SURS into a much better assets to liabilities funding ratio, which makes it possible now to look at enhancements and benefits and not have these be preempted by the costs and the effects on the liabilities of the System. One aspect of that comprehensive bill was the enactment of the 30-and-out, which Ms. Buettner described as a phased program. Under the General Formula of the Pension Code, Mr. Cunningham explained, an employee who retires prior to age 60 has a half percent per month reduction in his/her pension because of his/her retirement at an earlier age. So, if an employee had 30 years, he/she could retire at any age without this penalty being attached. Again, he said, this is strictly for General Formula retirements. However, the cost of the 30-and-out, while minimal, was believed to be offset completely by another aspect of that revision to the Pension Code, which was the establishment of options for participation in SURS. These became the traditional plan, the SURS portable plan and a self-managed plan, which is purely a defined contribution plan separate from the SURS. People participate in mutual funds, TIAA-CREF and other options like that instead of SURS. This has the effect of removing liability from SURS, and it was believed that the net affect of that transfer of liability would pay for the 30-and-out fully. The legislature enacted a phased 34-and-out January 1, 1998. Right now, we are at 32-and-out. We will be at 30-and-out in the year 2002.

"Rule of 85" is a result of CMS-AFSCME negotiations where "Rule of 85" is similar to 30-and-out. If the combination of chronological age and years of service sums up to 85 or greater, then the employee can retire at any age without penalty. There is agreement to reopen the Pension Code in the Veto Session to implement the "Rule of 85" for code agency employees.

The other primary formula under the Pension Code is the Money Purchase Formula, and neither 30-and-out nor the "Rule of 85" have relevance to the Money Purchase Formula. That is strictly an annuity calculation that is other than the denominator in the fraction for the decimal, which is actuarially driven by age; there is no affect by age, so the penalty does not apply. About 70 percent of retirements occur under Money Purchase, and this is growing because SURS is currently posting 10 percent on employee funds in SURS. The SURS investment compounds, and that causes the Money Purchase calculation to outperform the General Formula. Therefore, SURS has reviewed the prospects of including "Rule of 85" with SURS as well as the 30-and-out, though they have predicted that very few employees in SURS will actually be affected by "Rule of 85." Because of their age and years of service, they are going to be predominantly Money Purchase. Therefore, "Rule of 85" would not be implemented for them anyway. So, Mr. Cunningham said, if we have an opportunity in the Veto Session, we want to make the 30-and-out permanent for higher education and also include the "Rule of 85," which will give us a wider spectrum of coverage for these General Formula options.

I would like to make a comment about Dr. Peters, our new president, Rep. Wirsing said. As you all know, he has been working extensively throughout the NIU region and getting acquainted with places and meeting with a lot of people, and I had an opportunity in a couple of cases to be involved in that. He has a very positive response to his meeting with people. As Board members, you know it is a pinnacle time for Northern. There are some great opportunities here in a whole variety of areas, and I think NIU is poised to take advantage of that.

This being an election year, Rep. Wirsing said, we do not anticipate great things happening because of the shortness of the Fall Veto Session. Because of the restricted session we had this past spring, he said, I expect the House to break another record in the number of bills filed in the first year of a General Assembly. We continue to be in a good revenue stream from a state perspective, and that is an opportunity to accomplish some things financially when you have extra dollars to use.

Your efforts have made our jobs relatively easy, Chair Siegel said, and we thank you. I want to thank Rep. Wirsing for all his kindness, President Peters said.

Chair Siegel asked for a motion to adjourn the meeting. Trustee Skoien so moved, seconded by Trustee Joyce. The meeting was adjourned at 9:59 a.m.

Respectfully submitted,

Sharon M. Mimms
Recording Secretary