Minutes of the

NIU Board of Trustees

LEGISLATION, AUDIT AND EXTERNAL AFFAIRS COMMITTEE

December 13, 2001

CALL TO ORDER AND ROLL CALL

The meeting was called to order by Chair Myron Siegel at 9:10 a.m. in Room 233 of NIU‑Hoffman Estates.  Recording Secretary Sharon Mimms conducted a roll call of Trustees.  Members present were Trustees Catherine Adduci, Gary Skoien, and Chair Siegel.  Not present was Trustee George Moser.  Also present were Committee Liaison Kathryn Buettner, Board Parliamentarian Kenneth Davidson and President John Peters.  With a quorum present, the meeting proceeded.

VERIFICATION OF APPROPRIATE NOTICE OF PUBLIC MEETING

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

MEETING AGENDA APPROVAL

Trustee made a motion to approve the agenda.  It was seconded by Trustee Skoien.  The motion was approved.

REVIEW AND APPROVAL OF MINUTES

It was moved by Trustee Adduci and seconded by Trustee Skoien to approve the minutes of the June 5, 2001 meeting.  The motion was approved.

CHAIR'S COMMENTS

Chair Siegel welcomed University Advisory Committee representatives Judy Burgess and Sue Willis to the meeting.  Dr. Willis conveyed the regrets of Jenine Povlsen, official representative to the LAEA Committee, for not being able to attend the meeting.  Ms. Burgess said that she appreciated being able to attend the meeting and be kept abreast of the budget situation.  I know you are working hard to see that we do not experience any layoffs or salary cuts, and we appreciate that.  But if we have to go to those lengths, she said, as long as we are all in it together, we are with you.

PUBLIC COMMENT

The Chair asked Board Parliamentarian Kenneth Davidson if any members of the public had registered a written request to address the Board in accordance with state law and Board of Trustees Bylaws.  Mr. Davidson noted that no timely requests had been received for public comment at that Board meeting.

UNIVERSITY REPORT

92^nd General Assembly Report

Agenda Item 7.a.(1) – Substantive Legislation

Ms. Buettner included in the Committee report a summary of the substantive legislation addressed by the General Assembly in the spring and by the Governor over the summer.  This was not a huge substantive year for impacts on higher education.  We spent a great deal of time on the budget as the Board knows, and that was the case statewide in higher education.  We were very fortunate, she said, that not a great deal of additional regulatory legislation was passed by the General Assembly and approved by the Governor.  The meningitis legislation did pass and is effective in January 2002.  It was an agreed‑to amendment on which higher education worked closely with the sponsors to properly inform students of the dangers of meningitis and still be able to inoculate them without putting additional expensive burdens on the individual universities.

A student in off‑campus housing died as a result of a bacterium that was not a meningitis, Dr. Peters said, but it was the same bacterium in his bloodstream.  Since that announcement, as of 6:00 a.m. this morning, 56 students have had inoculations at a cost of $63 each.  We have also flooded all of our communication avenues with information on this situation.  We believe this was an isolated incident.  The incubation period ends in two days and there have been no cases reported.

Agenda Item 7.a.(2) – Fiscal Year 2002 Budget Update

At the full Board Meeting, Ms. Buettner said, we talked about the state of the Fiscal Year 2002 budget.  The reason we waited until today to have this meeting was because the IBHE held their annual budget meeting on Tuesday of this week and approved these handouts, which affect the operational and capital budgets for FY03.  We are still, at this point, in the same situation that we were in last week when we talked to the Board about the FY02 budget.  Originally, there was a $25 million cut, and then we were requested to set aside a $45 million reserve to cover employee health insurance benefits.  The business vice presidents of the universities are all meeting in Springfield tomorrow with representatives from CMS, the Bureau of the Budget and the IBHE to try to determine how that $45 million figure was arrived at and to try to determine the appropriate university share.  We do believe, at this point, that the $45 million will be completely shouldered by the universities, something we had hoped would not take place.

Fiscal Year 2003 Budget Overview

Agenda Item 7.a.(3)(a) – Fiscal Year 2003 Operating Budget

The General Funds budget drafted by the IBHE assumes the original FY02 appropriation passed by the General Assembly and the Governor in June, with a base of approximately 3.7 percent built onto that for all of higher education.  Northern received a 2.8 percent increase in the FY03 recommended budget on top of the original FY02 appropriation.  Collectively, the universities have a 2.6 percent increase over their FY02 base.  The $25 million and $45 million reserves were not factored into this, Ms. Buettner said, but, obviously, that is going to be an issue that will be debated and discussed at the Governor’s level with Bureau of the Budget between now and the Governor’s budget message and as we get more fiscal projections from the state.  During the Other Matters section, Ken Zehnder is going to give a quick report on the Economic and Fiscal Meeting held in Chicago on December 12.  However, she said, I will tell you that I think these will probably change dramatically between now and the Governor’s budget and between the Governor’s budget and the legislative process in May.

From my understanding, President Peters said, this year more than any other, the IBHE recommendation is in more flux than would normally be the case.  This hundred million dollar budget as developed has about $38.9 million for the public universities.  Most of that, about $30 million, goes into the fourth or fifth year salary plan, and it has been ratcheted down to a three percent salary increase plus one‑half plus one‑half for retaining critical faculty.  At that, he said, we would have to come up with the one‑half percent from our own local funds.  Also, the reason we are 2.8 percent is the almost automatic gross square foot add‑on for bringing on new buildings, which includes about $432,000 for Barsema, and approximately $96,000 for the Family Violence Center.  We have had a positive response that we will get the remainder of what we need to bring Barsema on in 2004.  There is no program money in this budget.

Let me just add, Ms. Buettner said, that Illinois is not alone in this particular scenario.  If you look at our neighboring states in the Midwest – Wisconsin, Nebraska, Iowa and Indiana – they are also experiencing tremendous financial difficulties, as are most states nationally.   The headline in the Milwaukee Journal Sentinel on Sunday was that they were in such severe budget straits at the state level that the University of Wisconsin System is facing a 25 percent increase in tuition next year just to offset it.  This is happening everywhere.  There has been very little discussion about the tuition response at the state level in Illinois.  This Board is very wise in waiting until as late as possible to respond, she said, because it will give us the flexibility we need given the dynamics of the budget process.  Governor Ryan has remained very committed to education throughout his tenure.  We have enjoyed fairly strong budgets, and I think we should not take that for granted.  I think he will do his utmost to make sure education receives the funding it deserves.  However, if there is very little growth, then there is very little money available to grow with.

Agenda Item 7.a.(3)(b) – Fiscal Year 2003 Capital Budget

The IBHE has recommended a budget of $443 million to the Governor for the FY03 capital list.  IBHE recommendations on the capital side never are completely approved by the Governor’s Office at a $443 million level, Ms. Buettner explained.  We would normally try to guess where the cut line is going to appear from the Governor’s Office.  Looking at Table I-6, FY03 Priority List-Higher Education Capital Improvements, you will see my estimation, at this point, that the cut line will be somewhere around project numbers 11 and 12.  That will be at either $112 million or $158 million.  Those are numbers that are consistent with the overall capital budget higher education process over the last few years.  This budget does not include venture tech funding, and it does not include some of the Illinois First funding.  However, at this point, it does not appear that there will be additional venture tech dollars available for FY03.  Illinois First is a separate issue.  The university has received the chiller funds and, very soon, hopefully, the Altgeld funding will be coming through that process as well.  Northern’s Barsema Hall FFE project is number 8 on the list at $4.9 million.  We cannot assume that this list will stand exactly as the IBHE has produced it, Ms. Buettner said.  We still have to work very hard to remind the Governor’s Office, the Bureau of the Budget, key legislators on the Appropriation Committees and the General Assembly leaders that Barsema was a donation that needs to remain in the top list.  Number 21 on the IBHE list is the Stevens Building renovation and addition planning money, and Project 32 is the Stevens Building renovation and addition remodeling funding.  As it stands now, it would be unlikely that those projects will be funded in FY03.

IBHE Director Keith Sanders fulfilled his commitment to me in February of last year to make sure that if we did not get Barsema money last year he would work hard to see that it is in a good position this year, President Peters said.  He has fulfilled that obligation, and now it is up to us to make sure that it remains there.  I am not happy that the Stevens Building is not nearer the cut line.

Our role here is generally dealing with the audit issues, Chair Siegel explained to Trustee Adduci, we seem to have done well cutting down audit findings and not having repeat findings.  Our committee is also the one that goes down and fights for these things so that we can move them up the line, and it looks like we have some work cut out for us.

Agenda Item 7.a.(4) – SURS and Pension‑Related Issues

The legislation to address the 30‑and‑out sunset provision passed the Senate.  However it did not pass the House, Ms. Buettner said, so the 30‑and‑out sunset provision stands and will end on December 31, 2002.  It is unlikely that we will address this in the spring given the State’s budget scenario, but we will try to pick it up again at a later date.

Federal Report

Agenda Item 7.b.(1) – Taxpayer Relief Act of 1997 - Status Report

For several years now, Ms. Buettner said, this Committee has been kept abreast of the work that Northern Illinois University has done in conjunction with our partnering institutions in other states to address this mandate that was passed by Congress in an attempt to provide tax relief via the HOPE Scholarship and Lifelong Learning Tax Credits several years ago.  We are very appreciative of Congressman Manzullo’s work with this issue and his willingness to take the lead on it.  This is an important initiative.  Kathe Shinham has put in literally weeks of her life on this.  HR3346 has now passed the House of Representatives.  It provides the universities, the community colleges and the privates with the necessary relief we need to continue to be able to provide taxpayers with the credit but, at the same time, not cost us millions of dollars to try to administer the program.  We are now looking for some sort of vehicle in the Senate to which we can attach that legislation.  We are confident that the agreements we have made with the IRS, the Treasury, Congressman Manzullo and the Speaker’s Office will continue to hold up as we navigate through the Senate.  I would like to also thank Kathe Shinham on behalf of the university for her attention to detail on this issue, Ms. Buettner said.  It is very complex and very technical, and she has put a lot of time and energy into it.  From the government relations perspective, she said, I truly appreciate it, and I think she deserves a thanks from this Committee and from the university for the help she has given us.  It will save the university quite a bit of money on an annual basis.

Agenda Item 7.b.(2) – Antiterrorism Legislation

The U.S. Patriot Act was passed in late October 2001.  Ms. Buettner told the Committee that on the cover page of the New York Times that morning was a large article about this act being implemented and about crackdowns on student visas across the country at universities and colleges.  Ten students had been arrested for visa violations.  The issues from the university’s perspective have always been a concern for the protection of student records, the FERPA legislation and protecting the university from any potential litigation or exposure while trying to comply with a subpoena issued by a federal agency to produce these student records.  There is $36 million in the Defense Appropriations Bill, which has been set aside for the funding of the Student and Exchange Visitor Information System (SEVIS).  The authorizing legislation was passed several years ago, but there has been no subsequent funding.  The higher education institutions nationally would like to see efforts to modernize this system and to provide more support at other consulates around the world.  This is a positive thing, Ms. Buettner said, and we think some resources will now be developed for it.

The other issue included in the Patriot Act, is the new federal requirements for the security of biohazardous materials.  While many institutions with medical schools and such have far more serious types of issues than does Northern, Ms. Buettner said, we do have some of these issues, and Dr. Williams has convened a working group, which includes all of the academic and lab people.  They are working to make sure that the university is in full compliance with the new regulations.

Chair Siegel inquired whether or not NIU’s relationship with Argonne and Fermi would be of benefit in regard to any of these regulations and rules.  Ms. Buettner stated that the two organizations have procedures in place, some of which NIU would like to adopt.

Agenda Item 7.c. – Fiscal Year 2000 Financial and Compliance Audit Update

Chair Siegel explained to Trustee Adduci that the Board of Trustees had dealt with over 30 audit findings when they took over from the Board of Regents.  Now, we traditionally run between two and six, he said.  As long as they are not repeating, and we have them worked out with the audit people, we are happy.  We dealt with the audit issues in detail at the last Committee meeting, Ms. Buettner said, but I wanted you to know that the university was successful in discussions with the Auditor General’s Office and the Audit Commission and, we were able to get the audit on the consent calendar at the Legislative Audit Commission.  All of their recommendations have implemented.  I would like to also note, Chair Siegel said, that we are the only university board, as far as I know, that has an audit committee.

OTHER MATTERS

Ken Zehnder, Assistant Director, State and Federal Relations, gave a report on the meeting of the Economic and Fiscal Commission in Springfield on Wednesday, December 12.  As we are all aware, he said, the first quarter of this fiscal year was extremely poor.  Through the first five months of this year, General Revenue funds were reported down $209 million.  As economic forecasters are apt to do, they gave both good news and bad news.  The good news was that last month was the first up‑tick in sales tax receipts since Summer 2000.  They referenced historical data which shows that the longer the period of economic prosperity, the shorter the recessions have been.  Since this has been one of the longest expansions, he said, they anticipate that this should be a short one.  Other positive news was that, although the unemployment rate has been increasing and is up to 5.7 percent, it is still less than the years 1994 and 1995 when there was no recession.

On the negative side, Mr. Zehnder reported, one of the things the legislature did to offset the revenue shortfalls was to utilize the Rainy Day Fund.  State statutes require that those monies be repaid by the end of the fiscal year, which means that the legislature will have to repay the $226 million by the end of June 2002.  One idea suggested was to pay it back the day before the end of session and then reborrow it the day after the end of session.  Also discussed were the congressional stimulus packages, which are pending.  That will have mixed messages, he said, although it may, in theory, stir the economy to some extent since corporate income tax receipts are based directly on the federal tax.  That could produce a short‑term shortfall for Illinois, which would negatively impact our budget.  The Commission also noted that their estimates are about $100 million less than the Bureau of the Budget’s current estimates, so they continue to debate that issue.

NEXT MEETING DATE

Chair Siegel announced that the next meeting date would be decided at a later date.

ADJOURNMENT

Chair Siegel asked for a motion to adjourn the meeting.  Trustee Skoien so moved, seconded by Trustee Adduci.  The meeting was adjourned at 10:46 a.m.

Respectfully submitted,

Sharon M. Mimms

Recording Secretary