Minutes of the

NIU Board of Trustees

FINANCE, FACILITIES AND OPERATIONS

COMMITTEE MEETING

September 4, 2003

The meeting was called to order by Chair Barbara Giorgi Vella at approximately 10:27 a.m. in the Regency Room of Holmes Student Center.  Recording Secretary Mimms conducted a roll call of Trustees.  Members present were Trustees Robert Boey, Myron Siegel and Chair Vella.  Trustee Manuel Sanchez entered the meeting in progress via teleconference.  Not in attendance was Trustee George Moser.  Also present were Committee Liaison Eddie Williams, President John Peters and Parliamentarian Kenneth Davidson.

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

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

It was moved by Trustee Siegel and seconded by Trustee Boey to approve the minutes of the June 5, 2003 meeting.  The motion was approved.

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.

Chair Vella welcomed all in attendance back for the new school year and to the meeting along with her fellow committee members, Bob Boey and Myron Siegel, and Dr. Peters, Dr. Williams and Provost Legg.

The Chair congratulated three NIU players who have been honored by the MAC:  P. J. Fleck, Vinson Reynolds and Steve Azar.  It is wonderful to see your names in the paper, she said, and my congratulations to you and the NIU football team for an outstanding game last week.  And good luck on your game on Saturday.

Chair Vella also recognized UAC Representatives Dr. Suzanne Willis and Dr. Xueshu Song.  Dr. Willis introduced Dr. Song, who is in the Department of Technology.  He is new to this committee this year, she said, and very excited and interested to be here.  Dr. Song stated that he was honored to be at the meeting.

Trustee Boey said that he first met Dr. Song when he was a member of the Presidential Search Committee, representing Engineering and Engineering Technology, and thanked him for his valuable participation.

As you know, Chair Vella said, this university, as well as other public universities in Illinois and across the nation, is facing budget issues.  This is the fallout from a number of things – the economy, 9/11 and terrorism – and, of course, that is not a complete list.  I want to state for the record that the Finance Committee is committed to our students and to bringing them a quality education at affordable prices while maintaining our responsibilities and duties as Trustees of the university.  I personally met with Vice President Williams’ staff before this meeting to review the outstanding projects and concerns regarding finances, and was impressed with their knowledge and their dedication.  It is easy to manage finances when there are a lot of resources.  But in times of limited resources, we must regroup and focus our priorities and remember who we are and where we want to go.  I believe that Dr. Williams and his team of professionals are working to insure that the university continues to move forward to provide the best quality education while maintaining accessibility and accountability.

Today’s agenda includes a number of items requiring Committee approval, the Chair said.  Among them are the Fiscal Year 2005 Appropriated and Nonappropriated Capital Budgets, the Fiscal Year 2004 Internal Budget, renewal for the Zeke Giorgi Legal Clinic contract, the naming of the Huskie stadium field and two contractual issues.  We will also receive a number of annual and periodic reports, including the Fiscal Year 2003 annual reports on capital activities, transactions involving real property, tuition and fee waivers, cash and investments and obligation of financial resources, quarterly summary of obligation of financial resources, a collective bargaining agreement and a legislative report.  And we are all looking forward to having a special report on the convocation center summarizing the center’s first year of operation, she concluded.

I am very pleased to introduce Dr. Greg Paveza, President Peters said, a professor at the University of South Florida.  Dr. Paveza is spending the year with us as an American Counsel on Education Fellow, which is a very prestigious program where senior administrators and faculty from across the country visit at a host institution.  Greg is a Chicago native, so he knows a bit about us and has already been very much involved in many activities.  We are glad to have him here, and we are glad to be part of the very prestigious ACE Fellowship program.  Also, sitting to my left is an alum of the ACE Fellowship program, Dr. Eddie Williams.

I would like to now proceed with the university recommendations to the Committee, Dr. Williams said.  First, I want to take a moment to thank you for your extra effort in taking over the chairship of this committee and meeting with our staff.  Those meetings went very well, and we are very pleased to have the opportunity to provide you a further in‑depth look at how the finance and operations side of the university works.  We look forward to a very positive and successful year in working with you as chair and with this Committee.

Agenda Item 7.a. – Fiscal Year 2005 Appropriated Capital Budget Request

The Budget Year Capital Improvement Requests were listed on page 11 of the Board reports.  Dr. Williams explained that these are major capital projects which the university requests through the Board of Higher Education.  The Board of Higher Education puts together a coordinated list for all public universities in the state of Illinois.  That list is then sent in a priority order to the Governor.  Then, after receiving the list, in his budget message the Governor identifies which projects he will be supporting as part of the next year’s budget.  NIU has nine projects, Dr. Williams said, and in any one given year, I have never seen more than two of our projects make it into the statewide priority list that was put together by the Board of Higher Education.  This Board has made inquiries and asked questions regarding the process of how the statewide list is put together.  This is primarily the capital list that was put together for Fiscal Year 2004.  We did not receive any appropriations for capital projects out of the 2004 budget process, so our lists and our priorities remain the same. 

The number one project is our Stevens Building renovation project, Dr. Williams said.  The focus of this project is on health and safety as well as on the need for providing adequate space in facilities for the operations of our Theatre Arts program, among others.  It has been on our list now for over three years, and we have made efforts to try to convince the state that we need to move forward on this.  Our second project has to do with our electric distribution system throughout the campus as well as our Wirtz Hall renovation.  I think everything that occurred on the east coast of our nation recently points to the importance of maintaining adequate electrical distribution systems throughout the nation and especially on a campus such as Northern Illinois University.  This project focuses on the need to replace various cables and lines and switches that will update our system and move us away from the potential of a major disaster.

Trustee Sanchez asked Dr. Williams if he believed that the health and safety aspect of any capital request is going to continue to be paramount under the present administration in terms of priorities for government capital funding.  I think health and safety has a special place in the thinking priorities of both the legislature and the Governor, Dr. Williams said, so I do think it makes a big difference.  The one or two projects that were funded out of Fiscal Year 2004 budget rounds were projects that were geared toward health and safety.  And, I think that we do have a special case here in putting Stevenson forward in that light.  In response to a question from Trustee Sanchez regarding to whom this special need should be conveyed, Dr. Williams stated that the university was going to emphasize this point to the IBHE first, because that is the first round of consideration and where the statewide lists will be put together.  President Peters has already made it very clear to the director of the IBHE, Dr. Williams said, that this is a priority about which he is very concerned, and that will be our first round.  From that point on, we need to work with the Governor’s staff as well as the legislature in carrying this message.  I know, Trustee Sanchez, that you and the other Trustees are very familiar with the processes that we have gone through in carrying our message and priorities to the legislature; I believe we are going to have to do that very aggressively if we want to have results.

I met with the Executive Director of IBHE last year and told him about our concerns regarding the process they followed in making capital improvement priority lists, Trustee Siegel said.  I also made very clear to him our dissatisfaction with the lack of funding of critical projects on our campus.  And there have been subsequent meetings with President Peters about those issues.  But I think, as Dr. Williams has indicated, we are going to have to redouble our efforts legislatively to bring the message home.

Chair Vella asked for a motion to approve the Fiscal Year 2005 Capital Budget Request.  Trustee Boey so moved, seconded by Trustee Siegel.  The motion was approved.

Trustee Boey inquired whether or not the term “capital renewal” was a new one that did not refer to deferred maintenance.  Dr. Williams said that some of the projects were for deferred maintenance.  He explained that “capital renewal” was a category used in the “Build Illinois” fund, and it was substituted for “deferred maintenance.”  These are the minor capital projects usually under a million dollars.  It is a general fund appropriation that comes into the IBHE and is then divided among the individual institutions.

Agenda Item 7.b. – Fiscal Year 2005 Nonappropriated Capital Budget

The Nonappropriated Capital Budget contains projects that are primarily funded out of the bond revenue repair and replacement reserve.  Chair Vella asked Dr. Williams to remind everyone why the university could proceed with these projects without state funding.  Dr. Williams explained that these projects are in nonstate‑supported facilities, which are defined by statute as noninstructional facilities.  They include the residence halls, Holmes Student Center, recreation facilities, athletic facilities, parking facilities.  These are funded primarily through the issue of revenue bonds.  By state statute, the Board is given authorization to issue bonds for noninstructional facilities.  These funds are not transferable, and must be used within the bond revenue system.  As part of the requirements for the bonds, we must maintain repair and replacement reserves.  These funds are then used to maintain the facilities for which the bonds were issued.  This gives the investor the assurance that their investment will be protected over the years.  The listed projects will be paid through the repair and replacement reserve funds that have been set aside for these purposes.  They do not require state approval, because they are bond funds that have been segregated for this purpose.  Chair Vella asked for a motion to approve the Fiscal Year 2005 Nonappropriated Capital Budget.  Trustee Siegel so moved, seconded by Trustee Boey.  The motion was approved.

Agenda Item 7.c. – Fiscal Year 2004 Internal Budget

As a Board, Dr. Williams said, we are required to review and approve the internal budget operations not only from appropriated funds but from all of our nonappropriated fund sources.  Table 1 of the report shows that in terms of anticipated revenues projected for Fiscal 2004, NIU is now at $333 million in operating dollars.  The appropriated fund report compared the Fiscal Year 2003 adjusted budget allocation of $110.9 million to the Fiscal Year 2004 internal budget appropriated funds of $101.8 million.  This shows the continued erosion of state support for the university.  We entered Fiscal Year 2004 with a major rescission of approximately 8.24 percent, a little over $9 million.  This is a further reflection of what is happening statewide.  You also will see growth in the Income Fund, he said.  This is primarily our tuition increase, which offset some of the reduction on the state side.  We are showing that the other operations of the university are operating under pretty firm and positive budgets.

Tables 2 and 3 provide distributions of these budgets along the object code lines that are established through the state.  We have agreed to detail our budget under these lines.  This is not new.  We have done this in past years.  But during the spring legislative session, after much deliberation, there were attempts to modify and restructure the way in which we display our budget.  Through the efforts of President Peters, Ms. Buettner and others, we were able to persuade the legislature not to make wholesale changes in the way in which we illustrate and use our budget.  So, the object codes remain much the same as in prior years.

Speaking of much deliberation, President Peters said, we sent into action our “chief much deliberator,” Dr. Eddie Williams, and Kathy Buettner, who was heavily involved.  First of all, I would like to commend Dr. Williams’ staff and all the others involved, because they have been absolutely worked to death by requests ad nauseam for analyses on top of analyses to the point where I was concerned that it had gone beyond the point of reasonableness in terms of reporting.  I was also concerned that the Board authority was being flaunted and eroded.  But because of the work of Dr. Williams, Ms. Buettner and people throughout the state at other universities, I believe we are in a better position.  We are not finished with this yet.  But, we are not frivolous or guilty of administrative bloat.  There are a lot of heroes and heroines in this, and I just wanted to pay tribute to our “chief deliberator,” Dr. Williams.

I remember in 1996 when this Board of Trustees was first formed, Trustee Boey said.  The state contribution was somewhere around 40 percent of the total budget.  And they are now at 33 percent and going down.  Seven percent does not sound like much, but seven percent off $333 million is a lot of money.  The point is that the state’s share is sliding down and there is no end in sight.

I agree, Dr. Williams said, and appreciate the comments from both Trustee Boey and President Peters.  Dr. Williams then recognized Ms. Abby Chemers who was responsible for doing all the requested analyses.

Let me also acknowledge Frederick Schwantes, President Peters said, who works on the academic side with Provost Legg, but also works closely with the budget people.  He has done a fantastic job of getting our students in programs and working with the academic departments.  Chair Vella asked for a motion to approve the Fiscal Year 2004 Internal Budget.  Trustee Siegel so moved, seconded by Trustee Boey.  The motion was approved.

I just want to say that until we are able to get the state to commit to higher education and make that commitment a priority, Trustee Siegel said, we are going to be fighting this battle.  Right now, that is not a commitment they have shown any desire to overwhelmingly fund.  So, again, we have to fight the battle and manage it better than others.  We cannot carry the water alone, so we have to get the other schools in line for that, too.

All the Trustees and, particularly, the Trustees on the Legislation, Audit and External Affairs Committee, accept the responsibility of carrying that water Myron talked about in conjunction with our wonderful staff, Trustee Sanchez said.  With the help of Eddie Williams, Kathy Buettner, John Peters and the rest of management, to the extent possible, we will leverage the relationships we have, not as if we can create new dollars, but to the extent that some university is going to be given some priority.  I am hoping that NIU, just like the big brass bird (referring to the eagle on the flagpole) will end up on top.

Thank you, Chair Vella said, I concur with you.  It is very sobering, but we are going to move forward.  I have a lot of confidence in Dr. Williams and his team.  They showed me that they know where they are going, and they have the resources – the abilities within the committee, his staff and himself – to help us move forward.

Agenda Item 7.d. – Zeke Giorgi Legal Clinic Lease Renewal

The Zeke Giorgi Legal Clinic in Rockford has proven to be a very successful program, Dr. Williams said, and it provides a very vital service to this community.  This lease agreement is for approximately 13,000 square feet at $120,000 per year and is supported by direct appropriation.  We are asking Board approval for the extension and renewal of the lease.

Trustee Sanchez made a motion for renewal of the Zeke Giorgi Legal Clinic lease.  Trustee Boey seconded the motion.  Chair Vella wanted it noted that she would not be voting on this issue.  For the record, she said, I have no connection to the clinic, legal or otherwise, have nothing to do with policymaking decisions and am not involved in any of the negotiations or real estate.  I just think it is proper for me to not vote on this issue. 

I wanted to mention, Trustee Sanchez said, that I just saw, as perhaps others have, the monthly publication called The Lawyer where they surveyed the law schools in the state of Illinois and its clinics.  And thanks to the Zeke Giorgi Clinic, Northern Illinois University made that list.  And, even though I am not an NIU Law School alumni, as an NIU alumni, I was proud to see that our law school had the privilege of having this clinic there in Rockford.  And it is with pleasure that I make that motion to renew the lease.

I really appreciate the stance that Barbara has taken, Trustee Siegel said, though there is absolutely no conflict at all.  Being as conservative as we are, it is a shame that we sometimes have to do this, but it is always better to do so.  I would ask that we have a roll call vote so it is very clear for everyone’s protection.  I remember its inauguration three years ago, Trustee Boey said.  It is a wonderful program and really serves a needy part of the population.

A roll call vote of the Trustees to approve the Zeke Giorgi Legal clinic lease renewal was as follows:

       Trustee Boey           Yes               Trustee Siegel      Yes

       Trustee Sanchez      Yes               Chair Vella           Abstain

The roll call vote of the Trustees was unanimous with Chair Vella abstaining.  The motion was approved.

Agenda Item 7.e. – West Campus Control Valve Retrofit Project-Performance Contract

This is another step on the part of the university to utilize one of the most unique legislative programs that has passed through our state General Assembly, Dr. Williams said.  We have a strong and positive staff in our Physical Plant area, and they have identified control valves, piping, pumps and control panels that are in need of retrofitting.  Instead of the university putting out the capital necessary to make these improvements, we wish to pursue it through an RFP for a performance contract.  Under the terms of such a contract and per the legislation that allows such contracts, the vendor actually takes the risk position on this, puts in all upfront capital necessary for the project to be completed, and then realizes a return only from the energy savings that they can document from the improvements being in place.  There is a ten‑year payback period.  So, in this instance, the university would avoid putting up $875,000 in capital, yet would get the improvements made under a guaranteed program.  So, again, I want to commend our Physical Plant director and staff and Mr. Albanese for putting together another one of these programs taking advantage of the legislation.  Each time Bob Albanese and Ken Pugh explain these performance contracts to me, Trustee Boey said, I understand that once in a long while, a good thing comes along.  It actually works, and I am just amazed.  Each time they define an area to do it in, I have to refresh my memory how this whole thing works, and it is remarkable.  I hope we can find more of those areas.

Let me jump in here and say that this goes back to our initial discussions about some of the things that are being considered about the way universities do business, President Peters said, and, particularly, about the public universities in the state of Illinois.  There are conversations going on right now at the Illinois Board of Higher Education and in committees that could lead to taking away the autonomy this Board has and that you grant to the university to enter into these kinds of arrangements.  It is just another front in the battle that we have to fight.

Chair Vella asked for a motion to approve the West Campus Control Valve Retrofit Project Performance Contract.  Trustee Boey so moved, seconded by Trustee Siegel.  The motion was approved.

Agenda Item 7.f. – OSHA Training Consultant

Our college of Engineering and Engineering Technology participates in the National Safety Education Center program, Dr. Williams explained, and we provide classes.  This is a special contract that offers is services through our College of Engineering.  Chair Sanchez made a motion to approve the OSHA Training Consultant contract, seconded by Trustee Siegel.  The motion was approved.

Agenda Item 7.g. – Naming of Athletic Field

This is a request on behalf of the university to formally ratify and approve the naming of our football field at Huskie Stadium as the Brigham Field, Dr. Williams said.  Several of the Board members participated in those ceremonies, and this is the formal request that formalizes that naming.

This was a great moment, President Peters said.  We are asking for a ratification and formal approval of that action.  It was in recognition of an individual who has done more on the athletic side for this university than anyone I can think of and who is such a tremendous individual.  I have gotten to know Dr. Bob Brigham and his wife, Gertrude, and they are just genuine great Northern Illinois University people.  They have inspired so many and have so many loyal supporters.  It was such a good feeling that we could, in this small way, name that field after Dr. Bob and Gertrude.  It gave a warm feeling to all those individuals who labored very hard to bring Huskie athletics to the place it is today.

I second what Dr. Peters just said, Trustee Boey commented.  I have had the pleasure of knowing Bob and Gertrude for a number of years.  A finer gentleman you will not meet.  Forty‑four years at NIU, and certainly, even today, he is regarded as one of the preeminent experts on the interpretation of NCAA regulations, and we all know what that takes.  It is remarkable that we have this occasion to honor him.  I think it is a great occasion, and I am fully in favor of it.

Chair Vella asked for a motion to approve the renaming of the Huskie Stadium athletic field to Brigham Field.  Chair Boey so moved, seconded by Trustee Siegel.  The motion was approved.

At each committee meeting, the university presents certain reports, Dr. Williams said, many of which are required by Board Regulations, state statute or to answer general questions from Trustees.  As a result, we have several reports for the Board, which I will briefly summarize.

Agenda Item 8.a. – Fiscal year 2003 Annual Report on Capital Activities

Our annual report on capital activities provides a profile of all of the capital projects being done on campus, Dr. Williams said.  It provides a breakout of the source of funding and gives a pretty good indication of where our funding is going and what activities are underway.  Right now there is a project of which we are exceedingly proud that deals with the ambience and presentation of our campus.  This Board approved and allowed us to pursue modifying and providing a landscape area in front of Cole Hall, which is in the walkway area.  We put in a new and very artistic bridge across Watson Creek as part of the storm water improvement project, as well as a fountain.  This provides another area on our campus that is impressive, and it makes it feel warm like a campus.  I hope everyone here will take the time to see it.  Patti Perkins is the project coordinator for the storm water project.

Agenda Item 8.b. – Annual Report of Transactions Involving Real Property

As part of the requirements under the Board Regulations, Dr. Williams said, this item provides a simple statistical report on transactions involving real property, most of which are leases.  There are 19 such leases, 18 of which are under $100,000.  The only one beyond that amount was approved today by the Board.

Agenda Item 8.c. – Fiscal year 2003 Report of Tuition and Fee Waivers

Because of state mandates, Dr. Williams said, tuition and fee waivers must be reported to the Board.  The tuition and fee waiver report has not changed significantly, and Northern is in compliance with all requirements.

Agenda Item 8.d. – Fiscal Year 2003 Annual Report of Cash and Investments

Again, Dr. Williams said, I extend my appreciation to our cash management staff, Tamara Farley and Bob Albanese.  Our overall return is 2.11 percent which, in this current economic climate, is a fairly good return.  Also, note that our intermediate and long‑term portfolios are at about a 2.8 percent return, he said, which is also good for this economic climate.  Especially when we are very limited in the investments we can make, Trustee Boey commented.  That is correct, Dr. Williams said.  We are very limited in the instruments we can use for investments, and when one is confined to those types of instruments, it does limit the amount of return.

Agenda Item 8.e. – Fiscal Year 2003 Annual Summary Report – Obligation of Financial Resources

Agenda Item 8.f. – Quarterly Summary Report of Transactions in Excess of $100,000

According to Board policy, Dr. Williams said, items under $25,000 can be approved.  Between $25,000 and $100,000 requires presidential approval.  Transactions between $100,000 and $250,000 require presidential approval and must be reported to the Board of Trustees.  The Fiscal Year 2003 Annual Summary Report-Obligation of Financial Resources provides those transactions.  The Quarterly Summary Report of Transactions in Excess of $100,000 provides a summary of those transactions between $100,000 and $250,000 that were approved by the President and gives the detail of those transactions.  Transactions above $250,000 require Board of Trustees approval.

Agenda Item 8.g. – Convocation Center One‑Year Update

One of the really great, positive stories that we can tell has been the construction and then the operation of our new convocation center, Dr. Williams said.  I just cannot overstate the impact that this facility has had on our campus and on the DeKalb community.  He then asked Bob Albanese, who is in charge of the convocation center area, to give a report on the first year of operation of the NIU convocation center.

Mr. Albanese gave a brief summary of the Fiscal Year 2003 operating results.  During Fiscal Year 2003, he said, we knew we were going into the year with the state having a tough year, so we really were not looking for the university or the state to support the convocation center.  So, the goal for FY03 was to try to generate a breakeven operation.  And that is a pretty lofty goal given that most facilities take two to three years to build a reputation and to get to that breakeven point.  But, John Gordon, convocation center director, who has already been on staff for two and a half years now, was brought on board way before the building opened, and we really worked hard to make sure we hit the ground running once the building opened last August.

I am proud to report that in Fiscal Year 2003, we generated total revenues of $5.1 million.  Some of the categories that are considered in the revenue:  student fees is a big portion; concessions and catering – the first time the university has attempted to manage the concession operation; advertising; rental incomes; commissions on merchandise sales within the facility; and equipment rental – organizations that came and rented the building also rented out equipment.  That added up to $5.1 million in revenues generated for Fiscal Year 2003.  The operating expenses, were $2.9 million.

Following are the cost of sales, basically, the payments to the promoters for the events.  Utilities are probably the biggest cost, Mr. Albanese said, and our labor costs to run the events are what make up this $2.9 million.  Revenues were $5.1 million, and operating expenses were $2.9 million.  That left about $2.2 million.  During the first year, we anticipated a contribution for our debt service payment to pay back the bonds of $1.3 million for the facility.  So we generated $2.2 million and $1.3 million of that $2.2 million went to meet our first‑year debt service payment.  And if we reached those goals, we thought it was going to be a successful year.  However, we were lucky enough to generate an additional $900,000 , which is going toward the reserves.  And, once again, these reserves are used for long‑term improvements in the convocation center and the whole auxiliary facility system.  It was an outstanding achievement that we were able not only to meet the breakeven point, but to exceed it by $900,000.

And a lot of that has to do with our director, Mr. Albanese said.  John Gordon really knows the business and hit the ground running.  We were really fortunate to have someone at his level to run the building from day one.

Before I get started, Mr. Gordon said, I would like to thank the Board for their support and their vision to do this.  I would also like to thank our President for raising the bar and bringing us into a new, exciting era, and the convocation center is lucky to be a part of that.  And thanks to Dr. Williams for his vision, support, and confidence in me; for the endless phone calls with questions; and being involved firsthand in the design and helping us add some things that would not have been possible had it not been for him being on board and totally supporting what we were trying to accomplish.  Because of that, we have  a very flexible, very user‑friendly facility that has allowed us to make some of the accomplishments we have made in the first year.  And, obviously, a great deal of thanks goes to Bob Albanese, who was right there.  He was my rudder, my oar.  I was able to bounce and run everything off of him to make sure that I was going in the right direction in a lot of ways.

Just a couple things before we show a video that is about four minutes long, which recaps all the events we have had in the last year, Mr. Gordon said, and then talks very quickly about some of the upcoming events.  It also gives some of the facts and figures that are also available in the Board report.  We received some national recognition in New Orleans this year, which is our national trade show where we all come together – about 3,500 people.  As you walked into this large 100,000 square foot‑plus hall, NIU’s convocation center picture was right there as you walked in to show the building and what it looked like set up in a commencement atmosphere, and it showed the flexibility.  So, Northern Illinois University, was seen by 3,500 people daily, and that gained a lot of attention.  Also, just this morning I was asked to speak at a national convention in Indianapolis at the end of this month to talk about opening a facility on a university campus.  It is another honor bestowed on the university because of the convocation center and the attention we grabbed – and the recent Maryland win did not hurt either.  I have had a lot of calls from colleagues on that as well.

A video was shown as follows:

Bill Cosby:  “And, ladies and gentlemen, I want you all to know that this building is the finest building I have ever seen (laughter, applause) … in the middle of a cornfield.”  (Music)

Announcer:  The convocation center has become the premier entertainment and cultural destination in the greater northern Illinois region.  In the center’s first ten months of operation, over 260,000 guests would walk through its doors.

The convocation center hosted over 175 events and 78 meetings in its inaugural year, bringing in a variety of acts such as comedian, Bill Cosby, “…over here.  Oh, my God, look at the corn!  Oh, God, corn.  Oh, my …”; R&B artists, JaRule;, legendary blues guitarist, BB King; and classic rock band, Stix.  The center provided an array of entertainment such as Monster Trucks, the world famous dancing Lipizzaner Stallions and the Broadway hit musical, “Grease.”

The convocation center has hosted trade shows such as the Northern Illinois Farm Show, university job fairs, and is the permanent home for NIU commencement ceremonies.  Last, and certainly not least, the convocation center is the new home for Huskie Athletics, men’s and women’s basketball, wrestling, volleyball and gymnastics have benefited from enhanced practice facilities and an increase in game attendance.

While the convocation center has improved the quality of life on campus, it also has made an impact on community restaurants and hotels.  In 2004, the center expects over 300,000 people to walk through the doors for nearly 200 events of hopefully diverse entertainment, conferences and conventions.  Recently announced acts include the Broadway hit musical, “Fame”; well‑known country artists, Rascal Flatts; and improvisation actor and comedian, Wayne Brady.

The convocation center remains committed to providing programs focused on education, career development and entertainment to the students, faculty and community of Northern Illinois University.

As you can see, Mr. Gordon said, we are quite proud of our first year of operation.  Right now, we are also in the process of trying to capture three other student‑oriented acts yet this fall.  And we are going to try “Sesame Street” here in November, which we think will be a good community event as well.  So our future looks very bright and very positive.  We are going to keep pushing hard to try to do a lot of unique things and continue on that course as much as possible.  I feel very confident that we have made an impact and changed the landscape in the Northern Illinois University region.  It is nice to be in a community of people who, when you talk to them, comment “No, I don’t have to plan on going to Chicago, I can now plan on doing something right here.”  That is something we at Northern Illinois University – our Board, our President, Dr. Williams, Bob, me and some of the other leaders here – are proud of, to have this arena for our faculty and our staff as well as for our students.

For a major endeavor like this to be able to not just breakeven but to make money, Trustee Boey said, is really remarkable.  It is a job well done.  In the beginning when our Board was first formed, one of our major thrusts was:  let’s keep the students here over the weekends, in town, and let the parents come here rather than the students going home.  And certainly the convocation center has gone a long way in meeting that goal.  Thank you for a job well done.

In a follow‑up to Trustee Boey’s comments, Trustee Siegel said, for those who may not have been on the Board at the time and those who may not remember, I want to point out the student reaction at the time and how difficult it was because we had to go down to Springfield and push this through the IBHE because people from outside this campus were coming onto our campus and objecting to us putting this convocation center up.  And, yet, if we ask the students today, they would not want to get rid of the convocation center anymore than they would want to get rid of any other new building that has gone up on this campus in the last 10 to 20 years that supported student environmental and aesthetic values.  I want to thank you for doing a great job and helping keep the students here.

I also wish to thank you, John and Bob, Chair Vella said.  I think you did a wonderful job, and it is a wonderful complement to our academic atmosphere.

I still remember the Board’s initial meetings with Dr. Williams, Trustee Boey said, and trying to financially figure how to make this thing go.  So, Eddie, thank you for that great job, too.  It was tough; but like everything else, when you look back, the Board was convinced that this was the right thing to do in spite of a lot of objections.  So, thanks for a great job.

One of our Mid‑America Conference member institutions is going to build a new convocation, athletic, multipurpose set‑up, President Peters said.  I do not know if they have been on campus to see our convocation center, but I have seen their drawings, and their functionality is the same size, the same 10,000 seats, everything the same.  But, their projected budget is $85 million.  Our Trustees set our budget at $35.8 million.

Agenda Item 8.h. – Collective Bargaining Agreement

This item was approved at the meeting of the Academic Affairs, Student Affairs and Personnel Committee and is presented here as an information item because of the salary increases involved in the contract.  In answer to a question from Trustee Siegel, Dr. Williams stated that the increase in the collective bargaining agreement was not a required increase but a negotiated increase pursuant to the increases the Board established for Fiscal Year 2004.  It is consistent with the salary increase plan that was established.

I mentioned in the Academic Affairs Committee that even though we are under no contractual obligation, President Peters commented, we are very pleased and happy to extend the salary increment that we have given to tenured and tenure‑track faculty to our instructors who are a very important part of the intellectual and instructional life of NIU.  I think it sends a great message from the administration and from this Board to the instructors on this particular contract, Trustee Siegel said.  In the Academic Affairs Committee, we also talked about the fact that this is a very positive step to take, Trustee Boey said.  Even though there is a previous commitment and agreement, we are doing something here that we think is right.

Agenda Item 8.i. – Legislative Report

Dr. Williams asked Ms. Kathy Buettner to give the legislative report.  I would like to give you a report on recent actions by the Governor, Ms. Buettner said, and perhaps a preview of the FY05 budget process outlook as it appears at this point for the state.  The Governor signed the capital bill for the entire state government operations, which was Senate Bill 1239, in the last two weeks.  That bill had several billion dollars worth of spending initiatives in it.  Interestingly enough, the Governor ended up vetoing, either through a reduction veto or a total item veto, a little over a half a billion dollars out of that bill.  The good news for NIU is that all of our reappropriations and capital projects listed in that bill remained intact in the legislation.  However, the caveat that the Governor issued when he acted on the bill was that the administration itself was going to be reviewing the release of those projects contained within the bill individually.  So, there are, for example, $657 million worth of member initiative projects in the bill.  Those are projects that are sponsored by individual members of the legislature and the leadership and the Governor as well.  Even though he did not necessarily item veto or reduce them in nature, he has said that only $450 million of that $650 million will be released by the administration for funding.  So, even though our projects remain intact in the legislation, we will be continuing to work very closely with the administration, and I may find it necessary to call upon this Board for assistance to get our actual projects released during the course of the FY04 fiscal year itself.

Most of you may have read that the Governor’s Office has officially appointed an education senior staff member, Ms. Buettner reported.  Her name is Brenda Holmes.  Her title is Deputy Chief of Staff for Education.  She is a former educator in the K‑12 system.  She was a Senate Republican staff member for several years in the early 80s.  She also had the government relations position with the State Board of Education for many years.  The last four years or so, she has been working as an independent consultant and lobbyist in Springfield.  So, it is an interesting appointment, and somewhat of a surprise for all of us who follow education issues in Springfield.  She is an advocate in general for education.  Her background and her expertise is definitely at the K‑12 level.  Ken Zehnder and I do know her from having worked with her in Springfield for the last ten years or so on various issues at the K‑12 level and other things.  She is trying to bring an additional staff member on who will specialize in higher education issues.  We look forward to working with her and consider it to be a good sign from the administration that they have a senior staff member now devoted primarily to education‑related issues.

The Governor signed the minimum wage bill in the last week or so, Ms. Buettner said, and it is a phase‑in.  In January 2004 the minimum wage increase is going to go up by $.35 to $5.50 for those 18 and older.  In January 2005, the base will increase again to $6.50 an hour.  That will have a fiscal impact on this university, primarily in the student‑related positions of close to $3 million.  So, we will honor that, but it is going to cost to the university in terms of our operating lines.

Ms. Buettner informed the Board that the university received a total of about six Higher Education Cooperation Award grants this year from the IBHE at the last meeting, most of them involving community college partnerships, Latino youth education technology support, enhancing success for students with disabilities.  Three of the grants were short‑term and three were long‑term.  This is better than we have fared under the HECA competitive process in the past few years.  In addition, we also received our consortia share of funding for two major research initiatives that have been funded for several years now.  The first is the Advanced Photon Source, which you have heard me report on before.  That initiative involves a consortium of five universities, of which we are one.  It is led by Northwestern and focuses on x‑ray technology specialties at Argonne Laboratory.  Dr. Clyde Kimball is the PI on that at NIU, and he has worked with our office for quite a few years in maintaining that grant.  It was originally funded at $3 million a year.  We were successful in getting it at $2.1 million a year, so it did drop a little bit.  But our share for that, institutionally, will be about $400,000.  The second major research grant from the state in the HECA program is the Illinois Consortium for Accelerated Research, the ICAR grant, which is a grant to a consortium of five universities led by IIT, of which we are also a major part, to help Fermilab maintain its preeminence in physics and, hopefully, be a leading contender for the linear collider, which will be designed and built probably around 2010 or 2011.  Our share of that grant is $450,000.  So, we were very pleased to have almost one and a half million dollars of HECA money coming in, which is a real positive.

As far as the outlook for the state goes, Ms. Buettner said, I came across two reports that were issued recently and would like to put them in context.  The National Conference of State Legislatures is a very reputable policy think tank based in Denver.  The NCSL does a lot of analysis of different state problems, and, obviously, budgeting is the number one issue facing all the states.  The other report is from the Rockefeller Institute of Government.  Basically, their reports are out in the last couple of weeks, and they have said that most states will face at least one to two more years of difficult fiscal conditions.  But I think the interesting finding in the report is that higher education, as they see it on a national level, is the most vulnerable budget item for every state in the budget environment.  That, of course, we have seen here in Illinois.  NCSL basically says that there are three primary strategies that states have met to remedy this 2004 budget problem.  They have drained reserves and rainy day funds, which we have done here in Illinois.  They have raised taxes and fees.  We have not raised the taxes, but we have raised the fees as well.  And they have cut spending.  And, of course, we have done that, as well.  Their report shows, however, that higher education is the only category of major state spending to post a loss from 2003 to 2004.  Revenues were offset in other categories, but not in higher education, even on a national level.  The Rockefeller report goes so far as to say that national economic forecasts have been adjusted downward, which they feel will bring another round of spending overruns and midyear budget cuts this year throughout the country.  So, the national prognosis is not good.

Taking that to the state level, Ms. Buettner said, I will tell you that as far as July and August go, our state revenue picture did not improve in any way.  In fact, state revenues dropped a total of 13 percent in July.  Because of our cash flow problems, we were not able to access the federal Medicaid dollars that are due to us from the state.  Of course, they have emptied our rainy day fund to the point of about $2 or $3 million right now.  Federal revenues for the state of Illinois were down 66 percent in July and August compared to a year ago.  That is over $320 million.  So, the state budget situation is not getting any better and does not bode well as we plan to spend as an institution of state government throughout the fiscal year and head into next year.  As a matter of fact, the Board of Higher Education has made a decision to delay the FY05 budget process.  In most years, the board has already been for a visit to each campus, and they would be beginning to work on the data and discuss things.  They have, basically, postponed that process for two months.  Now they have said that they will not release a budget recommendation to the Governor’s Office until probably January instead of November or early December as they have done in the past.  It could even be early February before they make the recommendation.  And that is due, primarily, to the fact that no one, including even the Bureau of the Budget, knows what the state’s economic outcome and situation is going to become later this fall as we try to plan for Fiscal Year 2005.  So, it is a very difficult situation here; but we are not alone.  It is that way across the entire nation.

On the federal level, Ms. Buettner reported, the good news is that they are close to wrapping up their federal Fiscal Year 2004 budgeting process.  I fully expect that the House and Senate will pass a federal budget by October 1, which is the start of the new federal fiscal year.  If this happens, it will be a major undertaking, because ever since I have been at the university – eight years – we have not had a budget that has been ready to go on October 1.  This past year, we did not get a budget until around March or April – six or seven months into the fiscal year.  So this is very good.  President Peters and I have been working very aggressively this year on federal research initiatives, and our progress will, hopefully, be known by the end of the month.  But the signs that we are getting are very encouraging at this point on the federal research initiative.

I would also like to tell you about two issues at the federal level which impact the university in some way, Ms. Buettner said.  As a matter of fact, today the House Ways and Means Committee is marking up the CARE Act that passed the Senate earlier this year.  This is the Charity Aid, Recovery and Empowerment Act and, basically, two provisions are of major import to universities, in particular, and they would affect our Foundation positively.  The IRA rollover would allow individuals to donate the funds in an IRA directly to a tax‑exempt organization without adverse tax consequences.  And the second provision would allow those who do not itemize on their tax returns – about 70 percent of all tax filers – to claim a partial deduction for charitable contributions.  Both of these provisions would enhance the university’s Foundation, so we are following those bills in Washington.

The last issue I wanted to tell you about, Ms. Buettner said, is that the SEVIS program is now fully on line.  This is the federal immigration program that was enacted as a result of the 9/11 issues.  It has been very onerous from an administrative standpoint.  I am very pleased to report that after many hours of extra work on behalf of our foreign student workers and program directors, we are fully compliant institutionally, which, I will assure you is a major feat.  But, they are having a more difficult job here at the university level with our foreign students, as they are across the country.  And our foreign students are experiencing that as well on the visa end.  As of August 1, any person who wants to come to the United States from a foreign country has to have a face‑to‑face interview conducted by a U.S. Consulate member, and this is a major issue.  The interview can be as short as 30 seconds or, depending on the country of origin, it could be a half hour or an hour in length.  Because no extra consulate officials have been added by the federal government across the world to meet these demands, there are delays of six weeks to three months to even get an appointment for their interview.  So, this could have an impact on our foreign students in the future.  We are doing the best we can to try to help them.  Again, this is a national issue.

I just have to say what a good job Kathy and Ken Zehnder have been doing for us on the state and federal levels, President Peters said, and we are hoping that we will have some very positive announcements in the next few weeks.

We have all been sobered by this, Chair Vella said, but we are going to move forward.  We are all excited about the new year, and things are looking good with the convocation center.  This is a university that works and runs, and it is a city we are all proud of.  We keep trying.  We keep doing.

Chair Vella announced that the next meeting would probably be in late November and Committee members would be notified at a later date.

There being no Other Matters, Chair Vella asked for a motion to adjourn.  Trustee Siegel so moved, seconded by Trustee Boey.  The motion was approved.

The meeting was adjourned at 11:48 p.m.

Respectfully submitted,

Sharon M. Mimms

Recording Secretary