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.

University of South Carolina

BOARD OF TRUSTEES

Fiscal Policy Committee

June 14, 2000

The Fiscal Policy Committee of the University of South Carolina Board of Trustees met on Wednesday, June 14, 2000, at 10:00 a.m. in Room 107-C of the Osborne Administration Building.

Members present were: Mr. Robert N. McLellan, Chairman; Mr. Herbert C. Adams; Mr. Alexander English via telephone; Mrs. Helen C. Harvey; Mr. John C. von Lehe, Jr.; Mr. Othniel H. Wienges, Jr.; Mr. William C. Hubbard, Board Chairman; and Mr. Mack I. Whittle, Jr., Board Vice Chairman. Members absent were: Mr. William W. Doar, Jr.; Mr. Toney J. Lister; and Mr. Michael J. Mungo.

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 Business and Finance John L. Finan; Vice President for Student and Alumni Services Dennis A. Pruitt; Vice President for Human Resources Jane M. Jameson; Vice President for Development Charles D. Phlegar; Vice Provost and Executive Dean for Regional Campuses and Continuing Education Chris P. Plyler; Director of the Department of Internal Audit Alton McCoy; Dean of the College of Hospitality, Retail, and Sport Management Patricia G. Moody; Interim Dean of The Darla Moore School of Business Rodney L. Roenfeldt; Associate Dean of the College of Hospitality, Retail, and Sport Management Thomas J. Davis; Chair of the Faculty Senate Caroline D. Strobel; Director of Budgetary Systems Ralph B. Summer; Assistant Dean of the School of Public Health Cheryl Addy; Controller John H. Campbell; Director of Business Affairs Richard D. Wertz; Assistant Vice President of Business and Finance Ken Corbett; Director of Payroll Pamala T. Cope; Budget Director James E. Kirk; USC Aiken Associate Chancellor of Business and Finance Virginia S. Noel; USC Spartanburg Associate Vice Chancellor for Academic Affairs Judith Prince; Director of Public Affairs Russell McKinney; and representative from Media Relations Jason Snyder.

Chairman McLellan called the meeting to order. He welcomed everyone present, inviting them to introduce themselves. Mr. Snyder stated that no members of the media were present. Chairman McLellan 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 the Committee; and a quorum was present.

I. Internal Audits:

A. Tracking Report: Mr. McCoy reported that some of the audits had unresolved items.

1. The College of Education's audit had recommended a policy and procedure that would govern daily operations of the College. The recommendation from this audit report had been implemented.

2. Regional Campuses and Continuing Education's audit had two recommendations which described deficient and questionable business practices regarding conferences and Regional Campuses and Continuing Education direct charges. The business practices were implemented, but the direct charges had not been changed since 1992. Mr. Finan reported that the Office of Business and Finance would continue working with Regional Campuses and Continuing Education to resolve the direct charges.

Chairman McLellan said he had missed the last meeting and requested an update on the USC Spartanburg audit of indirect costs. Mr. Finan stated that Dr. Odom was monitoring the audit recommendations for USC Spartanburg until they were fully resolved and a report would be given at the next Fiscal Policy Committee meeting.

3. Mr. McCoy stated that the College of Science and Mathematics' audit had recommended that corrective action be taken with credit card purchases to ensure that policies were followed. Dr. Odom stated that he was monitoring the audit recommendations for the College of Science and Mathematics.

Chairman McLellan asked how an implementation date was determined for resolving the findings in an audit. Mr. McCoy stated the Department of Internal Audit worked with each department to estimate reasonable time for completion, based on the seriousness of the finding.

4. Mr. McCoy reported the Development Office would produce future fundraising expense reports in compliance with the CASE regulations.

5. The College of Hospitality, Retail, and Sport Management's audit had not met the implementation date, but Mr. McCoy stated that the department was making progress. Chairman McLellan asked if recommendation number six on the audit concerning scholarships was out of sync with University policy and if the college was resolving the immediate problem. Mr. Adams added that the policy would create a campus standard for all scholarships. Dr. Pruitt responded that the University Scholarship and Financial Aid Committee had met in April and reviewed the policy and changes recommended.

The University Scholarship and Financial Aid Committee would meet with the academic departments to work out the policy. Not one policy would fit all the different colleges and many of the scholarships that the departments had were designated for certain kinds of students. The Committee would like to put the control of the scholarships within the actual colleges and departments. The Office of Financial Aid and Scholarships would ensure that each scholarship adhere to the policy established by the college or department.

The outstanding items would remain on the Audit Tracking Report until they were fully resolved.

B. USC Aiken: Mr. McCoy stated there were several findings noted during the USC Aiken audit. The business office had one internal control weakness, and Dr. Noel had stated that they were willing to accept the risk involved at present until additional funding became available to hire the personnel needed.

The Ruth Patrick Science Center merged grant and program income into other funds and were now implementing grant requirements. The Graduate Regional Studies Salary reimbursements for instructor's salaries were being reimbursed and credited to the centers' "E400" departmental account. Dr. Noel stated the transfer of the salary reimbursements to the account from which the instructors were paid had been implemented. The other audit findings concerned scholarships, credit cards, and the athletics department deficit balance and corrective action had been taken to resolve each finding.

Mr. McCoy concluded that USC Aiken was operating efficiently and in compliance with applicable rules, policies, and procedures of the University.

C. Payroll: Mr. McCoy stated there were several findings noted that had been resolved. A review of student "I-9" forms revealed that the department was not reviewing the forms to verify proper completion. Ms. Cope stated that all employees were required to complete an "I-9" form and to provide citizenship and drivers license information. All "I-9" forms would be in compliance in a timely manner and training for external departments was being developed.

The university could alter its payroll to allow employees to pay parking fees through payroll deductions before income tax was calculated. The program would allow both the University and the employees a financial saving. Payroll would implement the program beginning in August 2000.

D. Human Resources: Mr. McCoy reported on the internal audit of Human Resources. Human Resources was operating efficiently and in compliance with applicable rules, policies and sound management practices.

The awarding of salary supplements from various sources was not governed by a single policy. A policy would be established to include the required approval processes for all employees receiving supplements from the University, any affiliated foundations, and any other sources.

Chairman McLellan stated that the requirement for a policy was not meant for the Board to micro-manage the supplements but that the University needed a policy to determine receipt of supplements. Trustees requested information regarding who received supplements and the amount of each. Ms. Jameson stated that the supplements that were discussed in the audit were for temporary additional responsibilities and were not permanent supplements. Chairman McLellan asked who determined the amount of each supplement. Ms. Jameson replied that there was a fixed amount for most supplements. Dr. Odom added that a supplement was usually 15 percent of an individual's salary. For a dean's position, the University would offer a competitive nine month salary converted to a twelve month salary, and add an administrative supplement. If the individual returned to the faculty, the supplement and additional three months salary would be removed so that the former Dean would return to a nine month pay basis without supplement.

Ms. Jameson said that each supplement was reviewed internally and forwarded to the State Office of Human Resources. The USC Human Resources department would develop a policy concerning salary supplements for the Committee and the University administration to consider. Mr. McLellan asked Ms. Jameson for the time frame Human Resources would need to establish a policy, and Ms. Jameson responded one month.

E. The Darla Moore School of Business: Mr. McCoy reported on The Darla Moore School of Business' audit which found minor exceptions that had been resolved. Dr. Palms added information on the School's deficit reporting that standards for continuation would be raised with increased enrollment and consolidation of degree programs.

There were salary supplements within the School of Business that were given by the Business Partnership Foundation. Mr. Adams asked to what extent a dean could receive a supplement that was provided by a foundation. Dr. Odom stated that salary supplements given within the School of Business historically had insufficient administrative oversight. Dr. Odom would ask Interim Dean Roenfeldt and/or the next dean to develop a series of criteria, approved by the Business Partnership Foundation and the University Administration, that required approval to be given before a supplement was designated. Chairman McLellan asked how many faculty were currently receiving supplements in the School of Business and Interim Dean Roenfeldt replied that approximately 15 to 20 faculty members received supplements.

Dr. Palms said the University wanted to be consistent with all foundations with respect to procedures for salary supplements. They should be approved by the dean, provost, president, and the board as a recommendation from the administration for deserved support. There would be no independent authority by any foundation to provide a supplement without approval from the Provost and the President.

II. Designated Fund Quarterly Report: Mr. Finan reported on the designated fund activity through the third quarter ending March 31, 2000. Revenues would meet expenditures for the period without the use of prior year balances. Expenditures continued to be in line with the budgets through the third quarter.

III. Designated Fund Budget, Fiscal Year 2001: Mr. Finan presented the Designated Fund Budget for the Fiscal Year 2001. The budget had been reduced by $52,000 and the University had balanced the budget without using prior year balances.

Mr. Adams questioned the 2001 budget for the Provost of $69,000 and Mr. Finan responded that several items were included in the Provost's budget such as the Library and the School of the Environment.

Mr. Adams moved to approve the Designated Fund Budget for the Fiscal Year 2001. Mrs. Harvey seconded the motion. The vote was taken, and the motion carried.

Mr. McCoy stated concern that $200,000 was transferred to designated account from the Carolina Coliseum. The Koger Center could require a $200,000 supplement in the upcoming fiscal year. Mr. Stepp stated that he reviewed the budget for the Coliseum and Koger Center for the next year. Dr. Palms stated that this was a budgetary matter. Chairman McLellan stated it was the Committee's responsibility to approve the designated funds budget, and the Committee was hesitant to approve a budget that was uncertain.

Mr. Adams asked to be reminded of the priorities when the Board established the plan for funding the Koger Center. Was the first priority for the distribution of funds from the Coliseum to be the Koger Center, or the designated fund? It had been determined that the University would subsidize the Koger Center through Coliseum revenues because it was acknowledged that the Koger Center would always have a ticket revenue/presentation cost differential. The mission of the Koger Center included providing quality performing arts performances to the University and the Midland's community and the University had agreed to fund the differential through Coliseum funds derived from "pop" presentations. Mr. Whittle concurred in his participation in the development of this policy.

There being no further matters to come before the Committee, Chairman McLellan declared the meeting adjourned at 11:10 a.m.

Respectfully submitted,

Thomas L. Stepp

Secretary