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 on Friday, December 1, 2000, at 12:00 noon in Room 206-B of the Osborne Administration Building.
Committee members present were: Mr. Mack I. Whittle, Jr., Chairman; Mr. Herbert C. Adams; Mr. James Bradley; Dr. C. Edward Floyd, via telephone; Mr. William C. Hubbard, via telephone; and Mr. Michael J. Mungo. Trustee Darla D. Moore was also present.
Others present were: President John M. Palms; Secretary Thomas L. Stepp; Vice President for Academic Affairs and Provost Jerome D. Odom; Vice President and Chief Operating Officer J. Lyles Glenn; Consultant Allan Barber; Interim Budget Director Robert E. Bugbee; Assistant Treasurer Susan Hanna; Assistant to the Vice President for Business and Finance Ken Corbett; and Public Information Coordinator, Office of Media Relations, Jason Snyder.
Chairman Whittle called the meeting to order and welcomed those present. He asked everyone present in the room to introduce themselves, and Jason Snyder stated that no members of the media were present. Chairman Whittle stated that notice of the meeting had been posted and the press notified as required by the Freedom of Information Act, the agenda was circulated to the members of the Committee, and a quorum was present.
Chairman Whittle stated that the purpose of the meeting was principally to discuss budget, debt, organizational, planning, and legislative matters.
Mr. Barber then addressed the Committee saying that he had been directed to take whatever action he deemed necessary to complete a thorough review of the entire business office. He noted that the year end statement was sound, but the fund balances had previously included allocations which, if expended, would have caused the institution to be in a deficit situation of approximately $4.5 million. This potential deficit had been corrected.
Mr. Barber provided his independent assessment of the operations of the budget office and noted that corrections to the 2001-2002 had been made. He acknowledged the efforts of Messrs. Glenn and Stepp. Oversight had been moved to senior level control, and it was determined that the senior level team must work together to improve the relationships between senior administrators. Mr. Barber encouraged review and planning for changes which would affect the budget such as enrollment, and noted President Palms had established an Enrollment Review Committee.
Mr. Barber also noted that Mr. Bugbee had been appointed to review the budget office. It needed to be revamped and certain new budget processes implemented.
In response to a question from Mr. Whittle, Mr. Bugbee said that there were no budget problems discovered on any of the regional campuses. Mr. Mungo asked if appropriate controls were in place, and Mr. Barber replied affirmatively and said that the best control would be having more than one person with access to all information.
Quarterly reports would be made to the Executive Committee of the Board of Trustees, monthly reports would be made to the President and Senior Officers, and daily information would be available to Deans, Directors, and Department Heads. Mr. Bugbee listed what needed to be monitored and reported as key indicators: student fee income, enrollment trends and projections, credit hour production by schools and colleges which affect state appropriations, and fringe benefit costs. Items which should continue to be monitored and reported were: South Carolina Commission on Higher Education proposals and activities, legislative bills and actions, state revenue reports, and funding opportunities.
Mr. Barber emphasized the need to improve information technology support through enhanced automation of monthly status reports, on-line reports, and improved automated budget controls. A budget philosophy for team work should be adopted: the budget officer would be a facilitator of allocations made by the President's Budget Committee; budget practices would be confirmed by the President's Budget Committee; and budget recommendations would be approved by the President and Provost.
The budget was currently balanced and would be balanced by the end of the year. Mr. Barber explained the specific actions taken to balance the budget which included requiring below-the-line programs to pay fringe benefits, requiring summer school to pay fringe benefits, re-examination of carry-forward commitments, redirecting the classroom renovation fund to the general fund, utilization of the $1.3 million received but not yet authorized for expenditure by the Board, and other steps.
In summary, Mr. Barber noted that the initial budget review and five year audit was nearly complete; necessary budget adjustments had been considered and implemented; a balanced budget was in place for FY 2001; budget considerations for FY 02 and FY 03 were in progress; budget monitoring/checks and balances had been strengthened; further automation of budget processing was currently under review with the Chief Information Officer; and the enhancement of budget reporting to the Board of Trustees, President, and senior administrators was in progress.
Discussion ensued regarding the types of information to be reported, if budgeting software was in place, and potential budget challenges in later years.
The State Institution Bonds were backed 100 percent by the State of South Carolina, they were rated AAA, their debt service was paid from designated tuition fees, they had a maximum term of 20 years, and their debt payment was limited to 90 percent of fees.
The Revenue Bonds were USC debt, they were rated Aa3, they had a maximum term of 30 years, their debt service was paid from either housing or parking fees, and their net revenue could not exceed 120 percent of maximum annual debt service.
The Athletic Bonds were USC debt, they were rated MIG-1, their maximum term was flexible, their debt service was paid from a $3 football seat tax and Athletic Bond Student Fees, and their maximum debt was $40 million. They were currently issued as Bond Anticipation Notes (BANs) of $12,775,000 which were due February 23, 2001.
Four year debt history revealed that State Institution Bonds were down to $31,690,000 from a high of $39,045,000 in 1997; Revenue Bonds were up to $61,460,000 from a low of $39,143,000 in 1997; and Athletic Bonds were down to $12,775,000 from a high of 17,550,000 in 1997. The amounts would change significantly with the cost of planned construction such as the wellness/fitness center and the basketball arena.
Mr. Whittle requested the A. G. Edwards' report of comparisons of bonding indebtedness among institutions for discussion at the Board retreat.
There was discussion of undergraduate fee allocations for fall 2000 and spring 2001. Of the total $1,884 semester fee: $128 serviced Institution Bonds; $40 would service Institution Bonds for the wellness center - that amount would increase to $104 in FY 2003; $20.50 serviced Athletic Bonds; $22.50 serviced Renovation Reserve; $78.50 was a student health fee; $46 was a campus activity fee; and $16 was an athletic activity fee. In addition to affecting state appropriations, enrollment directly affected the budget.
A summary of the University's Bond Indebtedness revealed that the bond position was sound, the amount of debt issued was well within capacity, and fund sources for debt service was stable.
Mr. Bradley commended the report and requested a hard copy of it as well as the interest rates associated with the University's bonds. Mr. Mungo also commended Mr. Barber and Mr. Bugbee and expressed the appreciation of the Executive Committee to the members of the business office staff who had been assisting with their efforts.
Mr. Whittle noted the importance of strategic planning and cautioned that the University be sensitive to passing along debt to students. Dr. Odom noted that the Graduate Science Research Center was constructed without passing any debt service onto the students.
In response to Mr. Hubbard's question regarding the next step in accomplishing the goals approved by the Board of Trustees, it was noted that the matter would be on the agenda of the Executive Committee meeting scheduled for December 18. It was noted that the concerns expressed by the Committee with respect to the Action Sports contract would also be addressed at the December 18 meeting.
There being no further matters appropriate for discussion, Mr. Mungo moved and Mr. Bradley seconded that the meeting adjourn. Therefore, Mr. Whittle declared the meeting adjourned at 2:25 p.m.
Respectfully submitted,
Thomas L. Stepp
Secretary