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University of South Carolina
BOARD OF TRUSTEES
Executive Committee
June 14, 2000
The Executive Committee of the University of South Carolina Board of Trustees met on Wednesday, June 14, 2000, at 1:30 p.m., in Room 107-C of the Osborne Administration Building.
Members present were: Mr. William C. Hubbard, Chairman; Dr. C. Edward Floyd; Mr. Samuel R. Foster, II; Mr. Michael J. Mungo; and Mr. Mack I. Whittle, Jr. Member James Bradley was absent. Other Board members present were: Mrs. Helen C. Harvey; Mr. Miles Loadholt; Mr. Robert N. McLellan; Ms. Darla D. Moore; and Mr. Othniel H. Wienges, Jr.
Other present were: President John M. Palms; Secretary Thomas L. Stepp; Executive Vice President for Academic Affairs and Provost Jerome D. Odom; Vice President and Chief Operating Officer J. Lyles Glenn; Vice President for Development Charles D. Phlegar; Vice President for Business and Finance John L. Finan; Vice President for Human Resources Jane M. Jameson; Vice President for Student and Alumni Services Dennis A. Pruitt; General Counsel Walter (Terry) H. Parham; Chancellor for USC Spartanburg John C. Stockwell; Director of the Department of Internal Audit Alton McCoy; Controller John H. Campbell; Assistant to Vice President of Business and Finance Ken Corbett; Budget Director James E. Kirk; Director of Housing Gene Luna; Interim Chair of the Department of Communication Sciences and Disorders Elaine M. Frank; Director of Student Life Jerry T. Brewer; Associate Provost John N. Olsgaard; Professor of the Department of Computer Science Caroline Eastman; Vice Chancellor of Academic Affairs at USC Aiken Blanche Premo-Hopkins; Associate Dean of the School of Medicine Brian J. Jowers; Representative from McNair Law Firm Joseph D. Walker; Representative from Nexsen, Pruet and Jacobs Law Firm Alan Lipsitz; Associate Director of Periodicals of University Publications Chris Horn; Director of Public Affairs Russell McKinney; and representative from Media Relations Jason Snyder.
Chairman Hubbard called the meeting to order and invited those present to introduce themselves. Chairman Hubbard stated that notice of the meeting has been posted and the press notified as required by the Freedom of Information Act; the agenda and supporting materials had been circulated to the members of the Committee; and a quorum was present.
There was a personnel matter dealing with a proposed foundation salary supplement which was appropriate for Executive Session. Mr. Foster moved to enter Executive Session and Mr. Whittle seconded. The vote was taken and the motion carried.
The following people were asked to remain: Dr. Palms, Mr. Stepp, Mr. Glenn, Mr. Finan, Ms. Jameson, Mr. Pruitt, Mr. Phlegar, Mr. Plyler, Dr. Alexander, Dr. Stockwell, Mr. McKinney, Mr. Parham, Ms. Hyatt, and Ms. Mayfield.
Executive Session
Personnel Matter:
Return to Open Session
I. Salary Supplement for Provost Jerome D. Odom: Mr. Mungo moved approval of the USC Educational Foundation salary supplement in the amount of $20,000 annually to Dr. Jerry Odom, Executive Vice President for Academic Affairs and Provost, effective July 1, 2000. Mr. Whittle seconded the motion. The vote was taken and motion carried.
II. Contracts valued in Excess of $250,000
A. Indefinite Delivery Contracts: Mr. Parham stated that for the University to efficiently and expeditiously respond to small construction projects on campus, the institution would solicit bids with construction companies to perform work for the University. The following construction companies had been selected:
1. C.E. Bourne & Co., Inc.
2. Murton Roofing of S.C., Inc.
3. Newman Painting Co., Inc.
4. Watertight System, Inc.
5. Assurance Waterproofing Co.
6. JE Stewart Builders, Inc.
7. Preferred Construction
Under the contracts, the University could assign work to any one of the construction companies on an "as needed" basis. The University would not be required to award any work to these companies.
The State Engineer prohibited any company from being paid more than $150,000 under one project or more than $750,000 in any two years. Projects that were over $250,000 would have to be submitted to the Executive Committee for approval.
Mr. Mungo moved approval of the seven individual indefinite delivery contracts, each to be established on a separate, individual basis. Dr. Floyd seconded the motion. The vote was taken, and the motion carried.
B. EBSCO Publishing: Mr. Parham reported that EBSCO, a worldwide company which managed online periodicals via a database had made a gift to the University valued at approximately $65,000 per year for a period of 10 years beginning 5/1/2000. The University would accept the gift with the provision that the University incur no financial incumbrance of any kind in connection with the gift.
Mr. Foster moved approval of the EBSCO Publishing gift with no financial obligation to the University of South Carolina. Dr. Floyd seconded the motion. The vote was taken and the motion carried.
III. Refinancing Richland Medical Park, School of Medicine: Mr. Jowers recalled that during the Executive Committee meeting on April 25, 2000, the USC School of Medicine Educational Trust requested authority to borrow up to $12,000,000 to refinance existing indebtedness, to renovate and rehabilitate two medical office buildings, and to fund certain capital expenditures relating to the Trust. The Trust had been directed to develop proposals regarding this financing with the assistance of the financial advisor to the University, A.G. Edwards and Company, and to review the results of the request for proposals with Mr. Bradley and Mr. Mungo.
The Bond proceeds would be used to renovate the Medical Park Two Building at an approximate cost of $3,950,000, to refinance the outstanding debt on Medical Park Two at an approximate cost of $4,990,000, to refinance the Trust's Medical Park Four building at an approximate cost of $880,000, to purchase medical equipment at an approximate cost of $500,000, and to pay the costs incurred in connection with the issuance of the Bonds.
Proposals had been received by the University of South Carolina School of Medicine Educational Trust for the sale and remarketing for approximately $10,600,000 Variable Rate Demand Bonds, Series 2000. The proposal of the contract went to Wachovia due to the extended time frame. Secretary Stepp expressed appreciation for the significant time and involvement of Messrs. Bradley and Mungo, on evaluating the various proposals.
Mr. Mungo moved approval of the refinancing of the proposal as distributed. Dr. Floyd seconded the motion. The vote was taken, and the motion carried.
IV. State Institution BAN Resolution: Mr. Finan, with the approval of the President, requested approval for the State Institution BAN Resolution to finance the Strom Thurmond Wellness and Fitness Center as distributed. Mr. Foster moved approval for the State Institution BAN Resolution. Dr. Floyd seconded the motion. The vote was taken, and the motion carried.
V. University Budget for Fiscal year 2001: Dr Palms stated the University appreciated the scrutiny which the Board had given to the budget, including the May 30 conference call and in various discussions preparing for this day's meeting. His budget proposals were carefully outlined in written materials mailed prior to the meeting.
The summary which the Board had received used informed assumptions, in part because the General Assembly had not adopted a state budget. Under the best of circumstances, direct state appropriations would leave the University with great challenges to meet obligations and keep going forward.
The University had the benefit of a very useful process for building the budget each year. For six years, the process began by "The Future Committee" had enabled the University to reach goals despite great financial constraints. The University started the 1990's with less than 45 percent of its budget being funded directly from the state and experienced legislatively imposed cuts to its operating budget.
The University had received news from Moody's Investor's Services that affirmed these efforts. Moody's had upgraded the University's revenue bonds from A1 to Aa3. Moody's cited in particular the University's success in selective student enrollment, focus on private fundraising, and the state's infusion of funds for capital facilities projects. Dr. Palms called on Provost Odom.
Dr. Odom reported that the University had instituted "The Future Committee" which required each departmental unit to project how it would handle a budget cut and how it would address a partial restoration of that cut to its budget. The process forced units to focus on their most urgent academic needs.
The University also established a process of annual review that made it possible to its focus resources on hiring and retaining excellent faculty, the development effort, student residences, classrooms and laboratories, and improved student life opportunities. The University regularly invited peer review of colleges and departments.
The Columbia campus and regional deans had five-year plans in place which were updated annually to evaluate everything from enrollment trends to special academic opportunities that were consistent with the University's goals.
Dr. Palms thanked Dr. Odom and then described the stringent budgetary year. The state had supported a number of capital projects. However, above-the-line allocations were another matter. Initial internal requests totaled more than $40 million, including over $30 million for academic interests alone.
At the top were two core interests, faculty and students. Dr. Palms asked Dr. Odom to review the major proposed investments.
Dr. Odom stated that compiling a first class faculty was a major task for any institution seeking Association of American Universities (AAU) excellence. That meant appropriate salaries for new faculty and retaining the University's best faculty. It is proposed to provide faculty with increases ranging from zero percent to five percent, increases based upon performance. The state had also approved an increase for classified staff. The University must fund a portion of the state's mandated pay and benefits package.
If the House budget passed, the University's share would reach more than $1.4 million. The University must also be prepared to fund $427,000 in health insurance rates. The University might be asked to fund pay annualizations for fiscal year 2000, which would be more than $1 million for USC Columbia, or more than $1.5 for all campuses. To prepare for the worst case, the University assigned $939,500 to these costs, and set aside $224,000 for faculty rank promotion increases, which must be paid because faculty earned the promotions.
The strategic planning process identified several crucial target areas. The Darla Moore School of Business needed investments to continue its strong reputation and to propel it forward, to keep pace with enrollment, and to attract the type of dean it needed. The University needed to invest in Admissions and Financial Aid to strengthen student recruitment, and to improve the services provided through financial aid during this time of tremendous demand.
The University set funds aside to recruit deans in the remaining colleges, and to address the most urgent academic priorities in these colleges as these deans are brought on board.
The University needed to invest to increase its presence on the Internet
in a major way to enhance the public image, the visibility, and student and faculty recruitment.
USC's Law Enforcement and Safety Division was one of the few accredited police forces in the nation. The University needed to provide resources to retain officers (who were being recruited away by local law enforcement agencies).
The administration proposed to invest in the capital campaign and to protect intellectual property with investments totaling $138,000.
These items would consume the University's possibilities if funding equivalent to the House budget passed in the General Assembly and the University could only pursue these possibilities with minimal tuition and fee increases as recommended. Even then, if the House budget passed, the University would have to cut $500,000.
It was also possible that funding closer to the Senate version would pass and the University would receive an additional $1 million or more above the House's proposed funding level. If so, the University recommended applying those funds in priority to several crucial target areas requiring attention: a) recruitment of academic leadership, especially deans; b) research incentive funds to enable the faculty to build on its successful efforts; c) strategic faculty hires because the University needed top ranked faculty; and d) technology initiatives which would accommodate industry changes and upgrades in equipment, wiring, hardware, and software.
The University needed to decide how to fund these important investments. This year the University's budget proposed to keep tuition increases at the HEPI, which USC Columbia could not exceed because of legislative proviso.
The University needed to make these types of investments while minimizing burdens on students and their families.
At USC Columbia, the administration recommended an increase in tuition of three-and-one-half percent. This would probably be the lowest increase among all SEC institutions, and it included $49 for educational and general expenses and $15 for the bond revenue. No other across-the-board fee increases at Columbia were proposed. The increases, as in previous years, did not meet the inflation-caused rise in operating costs, and the University would have to absorb those costs.
The administration recommended the certain specific increases as described in the materials mailed for the meeting including but not limited to an increase in the matriculation fee for freshman from the matriculation fee from $25 to $50, and varied increases for out of state students, graduate assistant fees and other items.
For the Regional Campuses, the administration recommended increasing tuition and fees five percent. As with the Columbia campus, the University did not recommend increasing any other across-the-board fees at the regional campuses.
For USC Aiken and USC Spartanburg, the administration made a special request because each campus faced particular needs due to growth and especially low tuition and each campus currently charged far below its institutional sector tuition. An increase in tuition for resident students of seven-and-a-half percent was warranted, and for non-resident students, an increase of 7.8 percent was warranted at USC Spartanburg and an increase of 3.1 percent at USC Aiken. At USC Aiken, the administration recommended no increase in other fees. It did, however, recommend accepting USC Spartanburg's request to increase its health fee from $14 to $20 and its technology fee from $55 to $65.
The University had many needs left unfunded, but had chosen the opportunities of greatest priority very carefully and believed these investments provided the greatest leverage for the future.
Dr. Palms thanked everyone on the Executive Committee for their careful assessment of these recommendations. The University was making progress in important ways, and he believed these investments would carry that momentum forward even further. He reiterated that all proposed budget changes were carefully outlined in the materials mailed and had been discussed with Committee members in individual briefings.
Mr. Mungo moved the adoption and recommendation to the Full Board of the operating budget for fiscal year 2001, as presented, including tuition and fee schedules, the housing budget and associated fee changes, the athletics budget, and the designated funds budget. This motion included the adoption of the administration's recommendation of priorities of items to be funded at various potential levels of legislative appropriation for 2000-2001. Dr. Floyd seconded the motion. The vote was taken, and the motion carried.
VI. Other Matters: Discussions ensued regarding using the members of the Board of Trustees to lobby the legislature. The Board requested to be further utilized in soliciting legislative support of issues put before the legislature. The Committee members recommended that a list of items needed for the University budget be presented to each Trustee in September for purposes of lobbying the legislature. Lobbying groups could be formed to meet with representatives from various districts if very clear and organized facts and statements were prepared in advance.
Mr. Hubbard reminded the Committee that the budget would be presented to the full Board on June 22, 2000, and a very important agenda item would be discussed at the end of the meeting regarding the housing request for USC Spartanburg. A number of Trustees had participated actively in meetings on the issue. Mr. Hubbard encouraged all members to read the material on this matter very carefully.
When there were no other matters to come before the Committee, Mr. Hubbard declared the meeting adjourned at 4:10 p.m.
Respectively submitted,
Thomas L. Stepp
Secretary