The official minutes of the University of South Carolina Board of Trustees are maintained by the Secretary of the Board. Certified copies of minutes may be requested by contacting the Board of Trustees’ Office. Electronic or other copies of original minutes are not official Board of Trustees' documents.
The Executive Committee of the University of South Carolina Board of Trustees met Thursday, November 8, 2001, at 10:35 a.m. in the Carolina Plaza Board Room.
Members present were: Mr. Mack I Whittle, Jr., Chairman; Mr. Herbert C. Adams; Mr. James Bradley (via telephone); Dr. C. Edward Floyd (via telephone); Mr. William C. Hubbard (via telephone); and Mr. Michael J. Mungo (via telephone). Other Trustees present were: Mr. A.C. Fennell, III (via telephone); Mr. Samuel R. Foster, II; and Mrs. Helen C. Harvey (via telephone).
Others 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 Student and Alumni Services Dennis A. Pruitt; Vice President of Human Resources Jane M. Jameson; Vice President and Chief Financial Officer Richard W. Kelly; Vice President for Information Technology and Chief Information Officer William F. Hogue; General Counsel Walter (Terry) H. Parham; Vice Provost and Executive Dean for Regional Campuses and Continuing Education Chris P. Plyler; Chancellor of USC Aiken Thomas L. Hallman (via telephone); Chancellor of USC Spartanburg John C. Stockwell (via telephone); Budget Director, Office of Business and Finance, William P. Bragdon; Assistant Budget Director, Office of Business and Finance, Glenda Ridgey; Chair of the Faculty Senate Robert M. Wilcox; Assistant Treasurer Susan D. Hanna; Research Assistant Professor, Institute for Public Service and Policy Research, Jon B. Pierce; Director of Periodicals, University Publications, Chris Horn; Office of Public Affairs Representative Rebecca White; Director of the Office of Public Affairs Russell McKinney; and members of the media.
Vice Chairman Adams called the meeting to order and invited those present to introduce themselves. Secretary Stepp called the roll. Mr. McKinney introduced members of the media who were in attendance.
Chairman Whittle joined the meeting and stated that notice of the meeting had been posted and the press notified as required by the Freedom of Information Act; the agenda and supporting materials had been circulated to members of the Committee; and a quorum was present to conduct business.
Chairman Whittle directed the Committee's attention to the agenda and called on President Palms.
Dr. Palms reminded the Committee of last year's budget cycle and the difficulty in having to adjust to the initially proposed budget cuts, and that the final solution allowed the University to raise tuition only 5.2 percent rather than a greater amount. It was very positive and fortunate that the freshman class was at 3,000. That helped the University with cash revenues to maintain the quality of the offerings here at the University.
Dr. Palms projected slightly more than 2 percent of the budget for emergencies and reported that this fund remained available to help offset this present budget cut. Also available were unallocated funds which could provide up to $5.3 million toward the $6.8 that USC Columbia must identify.
He noted that in addition to this general University positioning, the administration had necessarily taken other very careful measures to assess how to meet this 4 percent cut. The administration was working with the departments and allowing them to be as flexible as possible and again permitting 100 percent carry forward into next year's budget. A hiring freeze was in place, once again, and departments had been directed to be very cautious about spending money for travel and equipment expenditures.
Based upon discussions with the Strategic Directions and Initiatives Committee and the priorities they had endorsed thus far, an independent review by the Provost and the President, recommendations from the reaccreditation committees for the University, the visiting committee recommendations to the Business School, the recent reaccreditation visit to the School of Public Health while taking into consideration commitments previously made to the deans in various departments, Dr. Palms recommended selective cuts to departments (with cuts ranging from 0-4percent). These cuts would provide approximately $2 million of the necessary relief.
Dr. Palms also requested a mid-year tuition increase effective January, 2002 to help manage this mid-year budget cut. He suggested an increase at USC Columbia for resident undergraduates of 4.9 percent, and for nonresident undergraduates an amount of 1.8 percent. This request was the highest permitted by state regulations for resident student fees while taking into consideration the market sensitivities and the scholarship impact for out-of-state student fees. For the regional campuses, he asked approval of a 4.5 percent increase for resident students, and a 4.6 percent increase for nonresident students.
At USC Columbia, such a tuition increase would generate about $1.2 million. There was no request for an increase in tuition at Aiken; but for Spartanburg, which was in dire need of additional resources to meet increasing enrollment, 5.1 percent was requested.
Mr. Bradley moved that the administration's recommendations as mailed to the Committee be approved. Mr. Mungo seconded the motion.
Dr. Floyd requested information about enrollment projections for the Spring semester. Dr. Palms anticipated an improved retention rate particularly because of the economic downturn and concomitant lessening of employment opportunities which the country was currently experiencing; this situation would influence students to remain in higher education.
Dr. Pruitt added that a significant number of applications for the Fall, 2002 semester had been received. Enrollment for the Spring semester, as always, would be less because of students who graduated in December. He further explained that academic dismissals did not occur until the end of the Spring semester; therefore, this process would not impact spring enrollment figures. And, the freshman and sophomore retention rate at the University of South Carolina was approximately 81 percent, considerably higher than the national average for comparative institutions.
Mr. Mungo asked about the possibility of further increasing the size of the freshman class another 1000 students for the upcoming Fall, 2002 semester; an additional 500 students had been accepted in the Fall, 2001. Dr. Pruitt responded that this consideration may be a viable option noting that "our applications to this point in time are up about 30 percent and our acceptances are up about 300 at this point in time." He explained that typically the most extensive influx of applications occurred between Thanksgiving and the middle of January; therefore, the largest surge was yet to come.
Chairman Whittle stressed the importance of addressing the infrastructure before considering another undergraduate freshman class increase to avoid the possibility of reaching a plateau where the expenses really offset any incremental gain by increasing the class. He noted that Provost Odom and Mr. Kelly had been carefully reviewing this course of action without jeopardizing the University goals established by the Board of Trustees.
Dr. Floyd asked that Mr. Kelly fully analyze a potential freshman class increase of 500 students, as well as 1000 students, to assess the various resulting implications "as far as income, how much it will increase our expenses, and then let Dr. Odom address the quality." Chairman Whittle indicated that Mr. Kelly, in conjunction with Provost Odom, was in the process of conducting this review. Dr. Floyd also requested a report of these findings as soon as possible. Chairman Whittle suggested that these items would be excellent topics for conversation at the upcoming Boards' Retreat in February. Discussions of future University funding strategies in view of lessening state support would require extensive consideration and review.
For clarification, Chairman Whittle stated the motion as follows:
That the 2001-2002 budget as approved by the Board on June 29, 2001, be revised to incorporate the changes in tuition and fees in accordance with the proposal distributed for discussion in this meeting. This is an action on behalf of the full Board and will be reported to the Board at its meeting on December 17, 2001.
Secretary Stepp called the roll of the Executive Committee to determine the vote. The vote was unanimous, and the motion passed.
Mr. Fennell expressed concern about the University fund balance. He noted that beginning July 1 the fund balance had been $12,800,000; when the original budget was approved on June 22, there was $1,600,000. With state restoration of a portion of the funding on June 29, that figure had increased to $3,949,000. One of the options to recover mid-year budget cut funding had proposed the possibility of reducing that amount to $844,000 which, he stressed, was merely a one-day cash reserve amount.
Mr. Kelly responded that at the time of the initial budget approval in June, the $3,949,000 "was anticipating a mid-year budget cut and some set asides were already identified for that." As he had explained earlier to Mr. Fennell, limited options were available to pursue another course of action. It would be unwise to reduce departmental budgets further in anticipation of yet another budget cut.
"It's not the best picture in the world, but it's the best one that we have to look at right now."
Chairman Whittle thanked Mr. Fennell for his concern. He believed that based upon the reports of the Strategic Directions and Initiatives Committee and the Washington Advisory Group, "we will look at where we should be focusing those resources that we do have and where cuts should take place."
President Palms also explained that the deans were proceeding with extreme caution; the University's granting of a 100 percent departmental carry forward for the fiscal year had allowed the postponement of various expenditures for a longer period of time. He further noted that the University had never operated with a large cash fund reserve; every year most of the monies were allocated. Most colleges in the state had operated in this manner.
Mr. Adams commented that the figure in question had been projected as an ending fund balance at the conclusion of the fiscal year on June 30, 2002; therefore, the cash fund balance would gradually decrease from $3,949,000 to $844,000 during the next six months. At that time, budgetary options could be considered. "I think we will be in a better position to address the fund balance at that time."
Mr. Fennell questioned how the University would recover the $12 million depleted from the current fiscal year cash fund balance to cover the various expenses. He stated that the University was going to have to make up $12 million next year before even starting, because this year it came out of fund balance, next year it would have to be raised with either increased enrollment or increased tuition before even considering any increases.
Mr. Kelly explained that the $12 million was clearly the amount of money available to the University at the end of June 30. At that time, the Board had approved an unallocated fund balance of slightly more than $3 million. A majority of the initial $12 million had been returned to the colleges for their use. He believed that the various deans would not have tied these one-time returned funds to any recurring costs; therefore, Mr. Kelly noted, the Board-approved cash fund balance had been $3 million, not $12 million.
Mr. Fennell hoped that there was a very clear understanding in place that those were one time dollars and nonrecurring, expressing concern that people get used to spending money and lose sight of that.
Respectfully submitted,
Thomas L. Stepp
Secretary