Minutes of the

NIU Board of Trustees

LEGISLATION, AUDIT AND EXTERNAL AFFAIRS COMMITTEE

June 10, 2003

The meeting was called to order by Chair Myron Siegel at 9:15 a.m. in Room 233 of NIU‑Hoffman Estates.  Chair Siegel conducted a roll call of Trustees.  Members present were Trustees Catherine Adduci and Gary Skoien, Student Trustee Jesse Perez and Chair Siegel.  Not present was Trustee George Moser.  Recording Secretary Mimms joined the meeting in progress.  Also present were Committee Liaison Kathryn Buettner, Board Parliamentarian Kenneth Davidson and President John Peters.  With a quorum present, the meeting proceeded.

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

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

In the absence of Committee reports, Chair Siegel read the agenda, which was as follows:

    1.    Call to Order and Roll Call

    2.    Verification of Appropriate Notification of Public Meeting

    3.    Meeting Agenda Approval

    4.    Review and Approval of the Minutes of the March 11, 2003 meeting

    5.    Chair’s Comments and Announcements

    6.    Public Comment, if any

    7.    University Reports

            a.  93rd General Assembly Report

                 (1)  Substantive Legislation

                 (2)  Fiscal Year 2004 Budget Update, and

                 (3)  State Universities Retirement System Update

            b.  Fiscal Year 2002 Compliance Audit Status Report

    8.    Executive Session – which stricken from Agenda

    9.    Other Matters.

   10.    Meeting Dates for our Next Meeting

   11.    Adjournment

Chair Siegel asked for a motion to approve the amended agenda.  Trustee Skoien moved to approve the agenda as amended, seconded by Student Trustee Perez.  The motion was approved.

It was moved by Trustee Adduci and Seconded by Trustee Skoien to approve the minutes of the March 11, 2003 and meetings.  The motion was approved.

I want to say hello to our UAC representatives, Beverly Espe and Sara Clayton, Chair Siegel said.  Neither representative had any comments.  He thanked them and expressed appreciation for their being at the meeting.

The Chair asked Acting Board Parliamentarian Gregory Brady 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. Brady noted that no timely requests had been received for public comment at that Board meeting.

93rd General Assembly Report

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

Chair Siegel asked Mr. Ken Zehnder, Assistant Director, State and Federal Relations, to give the report.  It was a difficult year, Mr. Zehnder said.  During this session, 5,908 bills were introduced.  Of those, 319 Senate bills and 380 House bills passed, for a total of 699.  Those are in the process now of being sent to the Governor.  He has signed very few of the bills, but I will mention some that he has signed relating to higher education.

Major Pieces of Legislation Impacting Higher Education

House Bill 1118, sponsored by Rep. Kevin Joyce, known as the “Truth in Tuition” or the “Predictability Provision” bill provides that tuition shall not exceed rates that are published when a student enters the university as a freshman.  That bill was negotiated extensively and all the public universities supported that piece of legislation.  We are thankful for the cooperation that Rep. Joyce provided, Mr. Zehnder commented.

House Bill 60, In‑State Tuition for Undocumented Aliens provides that under certain conditions, residents can receive in‑state tuition if they are undocumented aliens.  Those residency requirements include being a graduate from an Illinois high school, including living in‑state for a minimum of three years as well as the intent to file for citizenship.

House Bill 1543, a line item appropriation bill for public universities was sponsored by Rep. Granberg.  This year, Mr. Zehnder said, knowing it was the intent of the legislature, NIU filed a line item appropriation bill.  Ironically, when it was switched by the administration to another vehicle bill, it was switched in lump sum form.  So, for FY04, the university has a lump sum budget.  However, in subsequent years, House Bill 1543 will provide for categorization of spending and for a financial report to the Governor and the General Assembly by the university within 120 days of each fiscal year.  I want to particularly note Dr. Williams’ efforts working on that bill with the administration to provide language which was acceptable to both.

House Bill 3412, an ethics reform package sponsored by Speaker Madigan and Minority Leader Cross provides for ethics training and some other provisions.  But, of particular note to the universities is a prohibition to serving on public boards that make final determination decisions if a person is a registered lobbyist.

House Bill 2805, affecting the Board of Higher Education membership, provides that one member must be a faculty member from a public university.

Senate Bill 1586 is a bill that requires verbatim records for public bodies when they are having a closed meeting and provides for disposal of those records at the appropriate time.  Mr. Zehnder has discussed this with the university’s General Counsel, Kenneth Davidson, who will be undertaking a review.

Senate Bill 1733 was an effort to eliminate a loophole for the tax on the purchases of natural gas at the wellhead.  This is something through which Dr. Williams has been very efficient in realizing savings for the university, Mr. Zehnder reported.  There is, however, a provision that retains the exemption for institutions of education.  So, NIU will continue to realize those savings.

As interesting as those bills that affect the university are, Mr. Zehnder continued, it is probably more important to note those bills that did not pass and thus do not adversely affect the university.  House Bill 1263, sponsored by Rep. Ricca Slone, chairman of the Higher Education Appropriations Committee, would have appropriated the income funds for the public universities.  As was said in Finance Committee last week, President Peters added, our thanks goes to Kathy Buettner, Ken Zehnder, Dr. Williams and Steve Cunningham, plus the work of faculty and staff, and the Board of Trustees in going down to Springfield and making contacts.  Chair Siegel and Manny Sanchez were down and testified, and I believe that was very instrumental in holding back the Income Fund Bill.  All of that was necessary to make a potentially very devastating budget and policy year bearable.

Senate Bill 1974 had a proposed amendment that would have given the Bureau of the Budget, now to be known as the Office of Management and Budget, oversight and audit responsibilities for all university income funds and expenditures.  The amendment directed the OMB to review, determine the appropriate aspects of income and expenditures, and make subsequent adjustments to the GRF for the university the following year.  That amendment bill was opposed by the public universities, Mr. Zehnder said, and died for lack of a sponsor.

There were also several bills impacting the pension funds and a move to combine all the pension funds.

Agenda Item 7.a.(2) – Fiscal Year 2004 Budget Update

Briefly, as to the budget for NIU, Mr. Zehnder reported that higher education overall sustained cuts of 2.9 percent or $73 million.  The universities sustained a $108 million cut, or 7.7 percent; community colleges $9.5 million, a 3.2 percent cut.  The primary increase to higher education was from bringing back some of the fifth year MAP monies totaling $8.6 million.  That is an increase to ISAC of approximately 4.8 percent.  NIU’s GRF this year is $108.8 million, which is an 8.2 percent reduction.  That is what the other universities received with the exception of the University of Illinois and Southern Illinois University.  They received an 8.2 percent cut to their operations, but that excluded their patient care programs.  So, respectively, that reduced them to 7.7 and 7.5 percent cuts overall.

It was a limited year on capital budget, Mr. Zehnder said.  The IBHE had recommended $342 million in capital.  The Governor reduced that to $107 million.  The General Assembly passed appropriations for $111 million.  The two top priorities in capital that were on the IBHE list, went to Chicago State and EIU, both for electrical distribution projects.  The only other project that was picked up was Illinois State University, which received life and health safety issues renovation for two of their classroom buildings.  Included was $30 million for capital renewal, from which NIU will benefit.  The community colleges also received $50 million in their continued enhancement of construction program.  This is the third year of that program.

I want to note that President Peters’ efforts and appearances before both the various legislative and appropriations committees and the individual legislators were very effective, Mr. Zehnder said.  He carried our message and led the group of universities through the negotiations.  Particularly we appreciated the efforts of Minority Leader Cross, who lent an open ear.

Agenda Item 7.a.(3) – SURS and Pension‑Related Issues

There was an asset consolidation initiative that would have brought all of the pension system investments under one Illinois State Board of Investments, which failed to be acted upon, Mr. Cunningham reported.  That was opposed by the pension systems because of the uniqueness of each system with respect to its management.  The Boards and Commissions bill also was amended not to include SURS or the other pension systems.  This, too, was an issue of great interest to participants, including our staff councils, because of the independence of the system with respect to its participants.  It did pass, however, for the labor boards.  We also would like to acknowledge the work of Ken and Kathy with respect to seeking an amendment to make the General Formula consistent in the way that sick leave payouts are calculated for all employees in higher education.  After four attempts with different bills, no action was taken, so we will be working on that again in the next session.

Agenda Item 7.b. – Fiscal Year 2002 Compliance Audit Report

I met with Mallory Simpson last week to discuss the Fiscal Year 2002 Compliance Audit Status Report, Chair Siegel said, and she has told me that all of the issues previously raised regarding the University Foundation have been addressed and that we will not see those as repeats.  She also stated that no material issues have arisen in the audit to date which would prevent us from going forward.  Kathe Shinham has also told me that everything is under control, and she has nothing to report at this time.  All of last year’s issues have been dealt with.  Unfortunately, Kathe is leaving us and going to University of Illinois, Chair Siegel said, but we wish you well and thank you for all the good work you have done for us over the years.

The audit report showed that we have an issue with respect to a few people not properly documenting employee use of automobiles, Chair Siegel said.  I have asked Mr. Davidson to apprise the supervisor of each of these individuals as well as the individuals themselves that if the information is not submitted and documented, we want to see those people in front of this committee at our next meeting.

Chair Siegel stated that next meeting date will be announced at a future date.

There being no Other Matters, the Chair asked for a motion to adjourn.  Trustee Adduci so moved, seconded by Student Trustee Perez.  The motion was approved.  The meeting was adjourned at 9:38 a.m.

Respectfully submitted,

Sharon M. Mimms

Recording Secretary