~~i.J~., ,. .,. - Board of Governors - Wayne State … · FY 2014 GENERAL FUN0':1BUDGET FY 2014 AUXILIARY FUND BUDGET ... Kohrman also presented a chart explaining the rates for various

WAYNE STATE LJNIVERSrry

Board of Governors

BUDGET AND FINANCE COMMITTEE

June 26, 2013

Minutes

The meeting was called to order at 11 :05 a.m. by Gover9,,<;iJ Pollard in Rooms BC in the McGregor Memorial Conference Center. Secretary Mill" ~:·11ed the roll. A quorum was present.

~~ ~ Committee Members Present: Governors Dinff Dtf~>- Massaron, Nicholson, and

Pollard; Michael McIntyre, Faculty Rep~j~tative, Lo'i:i1~ omano, Faculty Alternate Representative; Erika Giroux, Student~tfft1ate Represe e

,,_@W' ~~. ~-

Committee Members Absent: Adham Alijali'tgJ!ftudent RJpresentan~/ '/~ ~;"' ·~

Also Present: Governors Dunas~~ O'Brien, /~ :·:l~nd Presidenf~Jtmour; Provost Wi~ters; Vice Presiden~s ~~i.J~., Lindse , ... ; , , Ratner, Ripple,. Staebler, and Wright; and Secretary M1ller;~r~ffij~'.l;l::Shamounf:§\~dent Senate President

~~ :;;;%~, ~ ,;~~ ,. .,.

•:t'.i"q ~--. V • ,~~;;. w* APPROVAL oF MIN~:~~M~;x 1,201 . . 0~~ 1• 1/;/ffe

a~w1#f :::~<>. <~ lll.W ~:-~'A· ACTION - ·· 1,¥\'.<:m motio · : Govern,~~ assaron anti' seconded by Professor

,z W ·«1-~, ~,½?Y '•>¼$· ~;& :;, :1/2 /

McIntyre, the IVtfi~Jt~s of May 1, 2 l~ij meeting of the Budget and Finance Co~, . iijej?, were ~);l!;Q :f~xi~entecr?&)he motion carried.

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CONTf~~ CY RESt:~~fi... -~ •w/ ~~. "<f~ -~-&

Mr. Kohrm~tft~Eorted that t~ werEf~transfers requested from the Contingency Reserve. With the retuf!W)j funds re~jj;J, ing aftlr a completed Dean Search, the balance of the Contingency Res~.e is $216,~f·.

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-~;;.; &W"'' ·~!~4*-6 FY 2014 TUITION AND~(tRATE RECOMMENDATION FY 2014 GENERAL FUN0':1BUDGET FY 2014 AUXILIARY FUND BUDGET

Governor Pollard indicated that the above three agenda items would be discussed as a unit and subsequently voted on in one motion. He called on Mr. Robert Kohrman, Director of Budget, to make the presentation.

1158

1159 Budget and Finance Committee Minutes - June 26, 2013

With the help of a series of slides, Mr. Kohrman reviewed the University's budget situation, including tuition revenue. WSU finds itself in a relatively high cost structure, with low tuition rates compared to its peers, and a drop in state support over the last decade, from $250 million to $183 million annually. During this period the budget was kept in balance with a slight increase in enrollment and a mild rise in tuition. However, over the last few years, enrollment has dropped and tuition rates have increased at a lower rate. The challenge faced with the FY 2014 budget is that it must cover inflationary increases and provide funding for critical investments in retention and research.

Examining the issue in more detail, Mr. Kohrman looked at the decrease of $70 million (28%) in state appropriations between 2002-2013. If state ap~1Jiations had kept up with the Consumer Price Index (CPI) during those years, WSU 1~

1i~l5e receiving $147 million more

than it received in FY 2013, and tuition rates could po~. ~ be 44% lower than their current rate. In a comparison with other universities, 30 y~j~f.~ ,~SU's annual tuition rates for a full-time student were similar to those of the. ;t.mftsity of<{MJchigan and Michigan State, ranging from $1796 to $2026, with the MP'd'fage at $156$itor FY 2013, U-M is at $12,994, MSU at $12,675, and WSU at$ ;,,~ti, with the MPU<~f~age at $10,465. The annual percentage increase for other univer~ during this time rar\['f<!iJrom 6.4% to 6. 7%; WSU's '!"as 5.9%. . Mr. ~ohrman also compaff@J,)'VSU's ~!ulty salanr-~~d a?ministrative costs with other univers1t1es. The average sala,v.JJ~r ali:i ff-professor arw~ IS $117,000, less than at MSU or at the U of ~~!?Ji higher th§~t~ PU average of ~04,000. With respect to administrative costs, the1~,~ij~,,,. MPU pe',~fge is 15. 7 administrators per 100 students; MSU has 16.5%, while Way:rJe ~{tJ:tas 10.3 ~~o get to the MPU average, WSU

-~~ ~,'. ~-> would have to add 1600 additional starr~>. ·::'~:,:::- -~~~ iefi~~~- ~¾, ·~,, ~:a

As Mr. Kohrman m~. w~~~r, the c~Mieng~~~)}~ infl§tionary increases, including the mandatory com.1~sation ~~ase fo(~ i~of 2.1~and inflationary increases for facility services, primf"@';Mtilities, IP deferre' .~J{Jintenance, as well as an increase of 11 % in financial a. id .. In additi5(~ger~,~--.:~~t servic~tJ.$3.4 million and strategic investments in

t t. ... "W , h f $tf~I~½-,~ ,@,,, re en 10n c}l'.l,,~i~~9 o ~P.&'0i~ 1::1M:::,%{@:%·"/ ·~ ~~,~;,P~ ~~~ .,/@~iz · ~,iff

Signifi{~ efforts ;:; !J.so ~(e. in th;,f~#014 budget, cutting $19 million from the previo0gf$jr, or 5.5%, /~~jS thEfi~rd in the divisions and schools and colleges, from their personal, -~!Jtn. istrative, tra~~ and ~\iral operating costs. Schools and colleges also took a reduction ilWRJ:irt-time facul{Wand redtfetibns in vacant faculty lines.

~ -w~-::;;:~ ~

On the revenue sif~Jv1r. Kohl" Jrn presented a chart illustrating the percentage increase in state appropriations/~~ II o.hf:w'Michigan public universities. The highest was Grand Valley State University with : ::vffi~tffi the U of M and MSU both had roughly a 1.8% increase. Wayne State was the offif university to receive an increase of below one per cent, specifically, .29% or $535,000. Indirect cost recovery will also have a slight decrease of about $5.5 million, while investment income will have an increase of 16% or about $1 million.

In terms of tuition increases, the administration proposes that an undergraduate resident taking 30 credit hours per year would have an increase of 8.9%; a graduate resident 4% and non-resident 2%; while the Doctor of Pharmacy would be 4% and the Law School 6.8. %. Mr. Kohrman also presented a chart explaining the rates for various credit hours, ranging from 7.6% for three credit hours per semester to 8.9% for 15 credit hours. A full-time undergraduate taking 30 credit hours over two semesters would pay $900 more per year, or

Budget and Finance Committee Minutes - June 26, 2013

1160

$300 more per week for each of the 30 weeks while attending classes. In addition, a linear chart and two tables compared the effect of WSU's 8.9% increase to that of other Michigan universities, including the University of Michigan which had adopted a 1.1 % increase, and Michigan State University, a 1.9%. The two tables compare the cost of tuition for students taking 24 credit hours per year as well as the standard 30 credits, since Mr. Kohrman explained that the average credit load for WSU students is 12. 7 credit hours per semester. Despite Wayne State's 8.9% increase, its tuition rates in dollar amounts are still considerably lower than either U-M's or MSU's. A WSU student would pay $8,968 per year for 24 credit hours compared to an MPU average of $9,582. For 30 credit hours, the cost would be $11,097 compared to the MPU average of $10,816, a figure slightly higher than the average but still less than four other universities in the state. .· .da ~,m.~

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In terms of enrollment, a slight decrease of 2.2% is ~ /fi: ied for the Fall Term 2013. Mr. Kohrman pointed out, however, that the registration.:,Jffa {~ only half-way completed, and the administration will provide updates during the,,·~*tfew mW!fJ~~·

. #ffJ . ·~~~ . T~r~rng to the General Fund budget, ~r. Ka~~ said t~~ bu?gett,W! be balanced at $576 million for both revenues and expend1tures-~1th the tuition rncre~j~f 8.9%, the overall budget will be incr~ased by 1.1 %. Again, W~~,gerce. nt~~ incr.e.aseW~pot correlate ~ith the dollar amount increases when .~ompared wrf~the,~fvers1t1es. Tff~ of M's tu1t1on increase was 1.1 % but their budg~}WJ\ki1row by 4.eff/~ffs tuition was incrlased by 1.9%, but their budget will increase by 3:'¥&£~]:iJJj~< 1vne State T~Q. nsistently two to three percentage

'Z1{1:: ,,,-,: ~ %~ points below either U of M or MSU f(le n:t~f;.)he growttj~te of its revenue and expense structure. ~~1,,, ·~z, ~2>

~&r~~ -~~, . <~~, ~ '1m w:3~,?; -,,,~ A study of the re~*slf(~Jhat tuifl\\ an~~~~:ff,w,;mpWss about 60% of the total revenue budget, or·~-t $348(~· jon, whif~)~J@c pproprf$)lms are at 32% or $138 million. Mr. Kohrman show~;;!Jow t revenue~~-, anged since 2001, the year that state appropriations began /~J!hin~.d::: ,P1 the s~ picked up two-thirds of the cost for an in-state stu pern~~, -~z:attend c?'-1-ifli ·,. ~ijb, the. sri:Jpent responsible for one-third. Shifting

~~/..:/:,ff~:Z, -~~,') ¼• //~¼/,:I;, ·~ forward,~,~ · · ·1iJ\ffi~JJate 'ni~ picks ~WJ&lY fffe-third of the cost, with student tuition coveri {!,,, e remainin§{:7'. -thirtff'.& %:~

'1*':::· . . In term/~fj.~~penditures, , pe.n· ~J2.n accounts for 65% of the budget, followed by operating exf5\~es at 15%, ity ser«fes at 7%, and financial aid at 11 %. In addition, the University mus~Js.e investm~· in three critical areas: • Retention - FIY~J will be ,Oif ~sted in graduate and undergraduate retention, and plans

are being made tci~~bl~.@[lll office of multi-cultural affairs within the Provost's Office as well as a transfer cerft(I&r~l3ruit and retain students currently in the community colleges.

• Research - Plans arJ~/1nvest in four areas: 1) improving core facilities; 2) providing bridge funding for faculty members who currently have grants; 3) providing additional funding for School of Medicine faculty lines; and 4) putting more money into faculty start-up packages.

• Campus-wide strategic investments - The largest of these is debt service at $3.4 million. Additional money must be added to the library acquisition budget, since that budget has an inflationary growth of about 9% annually. The administration is also looking at changing some part-time faculty to lecturer status, under the assumption that lecturers would be more effective in retaining students than would part-time faculty. Enhancements are also planned to the Provost's Office, human resources, and the marketing budget.


The auxiliary budget, of which 47% is housing, will grow by about $1 million or 2% over last year. The auxiliaries also took budget reductions, including a 5.5% reduction for those that receive general fund support. The expendable restricted budget of about $197 million houses the federal grants and contracts. Because of federal budget cuts, research and development expenditures will be at about $217 million, compared to well over $250 a few years ago. This reduction will also impact indirect cost recovery which is projected at $33 million in the FY 2014 budget, compared to $35 million for FY 2013.

The total overall current funds budget will be about $893 million. State appropriation revenue will represent about 20%, tuition and fees about 39%, th~~endable restricted fund about 22%, the auxiliary budget 5%, and the designa~td f @%?~venue at 9%. In terms of expenditures in the current funds budget, the primary &!~"Wn of the university - instruction, public service, and research - make up about , . lJJJ1:1~.yarious support programs -academic, instructional, and student services -AP~fil 32o/;f~t)~ auxiliary, plant operations,

d f b 140¼ ;'1//@ '?<:P7/.• an trans ers a out o. . 7f$w' ',;;-;;;~~ '.; :.Y/4~7/7 h/,/h' 7,'N//Q/ '•!',;fl}/• ;,5i(,f%l. ,;~

In summary, despite the zero percent incr~,Vi in the budget and f~f:!;actional increase in state appropriations, the administration has {&I~ as m as possrl:l®Jo protect all the academic programs and offerings. ,Notwithstandf~!h~·-" , et reductiorf~~19 million over last year, limited funds have b~ {OVided for:;;-#l~' investments sufW as retention, research, and new facilities. Altho ™ition incref'(f1Rf 8.9% moves WSU's rates closer to the MPU average, they still remar.ii:!3 &'~J~.average'~~students taking 24 credit hours. Finally, financial aid will have an 11 °i<fft&recf~ ~bout $,!tQ}llion, for both the need- and merit-based scholarshiA.S~?'tamd, grants 'f6'thelp o }:/he tuifi~ increase. Mr. Kohrman

/~,:,:,; ~;::p;:,:. i:t~· ~ :;;;c;:,]'0, :;?,W COnCIUded hiS preseotpa·J~ '':"«74~f*.:,, ;~ .~~-~'ff ~t@':?b_,. •,,Y

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Professor McIntyre mad~f~& fo~~~~:-~tateme~t1, ,(,j.:~~~ ··-~,1~%~~~- ~-

I efmf&&"rl~lf'VW~J!jve cf(1forts of f~~5i!J.11~tration and this Board to come to some ~~@'Paf ~ resofff(lt}ha.f~)Jerves ffy~~re functions of this ~niversity duri~g very, vif@g1fflcult econoijl~ t1me§9~ we accepted the cap that Lansing proposed, 1t would hav~~l only impov~ . ed thf~~»,iversity now, but it would have had negative effects that ~~l};I ,have carri' rwarcl'1ftft the next ten years. I just do not think that is an option tll~~)ljs Univers an consider. I regret, of course, the need for again raising tuition on 0~1:.J1Jdergra e students. I have been a strong advocate over the years of trying to mfril.mJ creases. I understand the difficulties that they create, but I think that in ord~ 7 to provide the quality education that we want to provide and that these students·.. e coming here to get, we need to have a certain minimum amount of money. And I do not think that what we are doing here goes beyond just doing what is needed to keep us going, to keep us going at a good level and giving us hope for the future.

I would like to make a couple of comments about various investments. If you look at these investments closely, you would see that in almost every case they are not some kind of a new initiative that we have decided to take on just because we happen to be broke. We are not taking advantage of the situation to raise tuition more than we need in order to get some funds for special projects. In almost every case you will see that


1162

these are remedial, that we talk a new building, a new something. Go look at the old one and you will see that we are not doing something to make the situation better than we had in the past, we are simply trying to restore our buildings that are worn and need repair or need to be replaced, and I think that is a very important thing to understand about these various items. We can argue back and forth about each one of these; this is not the time and place to do that. My committee, the Budget Committee, is not taking on any of the particular items on that list. What we had hoped was that there would be provisions for money in the Provost's Office to handle the inevitable problems that would arise because of the really, really big budget cuts that were imposed on the schools and colleges. These cuts were not minor. I sat through the budget hearings for a month and a half,,,. -~ it was very sad. Every time the dean came in it was to cut something beyong1J,1ir&re. We just do not have the money. And so I think that what we are trying t2&'~ere is maintain as best we can a high quality institution. ,$I~,

•,{,'//Z, -~ ,r;tc,,., '/q' 'v.@ I would like to make two other comm~~Jf/This is the~xersity of Opportunity. I came here in 1975. That's how we v),tf~ ourselves. That!~pw we were viewed by the State. And that was thought to @W~ood thing. That wt(~. good thing, that we were the University of Opportunity. Antl:f~tOU loo~~w,hat has h~~ned over the last several years, the University ~f Opportun~)i,~ it.·~ if*the unive.rsil'1,1,t has suffer~d the most from budget cuts ~~udget sh1fts'~J~f~w that Lansing ha#problems with their budget; they are facing"~f~~s~ues just'ft~X{e are and they are making priority choices and the priority is the~i~!11ffi:f!ll~ college'~,the western part of the state or elsewhere, and i~ is not the Uni~jity 6f{lf.J¾9. "lunity':'(f~irct, that seems to be the one that they ar~eo : ,,,.~~ftS9r, when ~ti look a.ifffi~· .numi:5f~... And I want to say, on a 0 ¾~J .. i?'~/~ .. ;~ /~ Z ,½ ~ number of th.~ro'ei~~tegoriesij_hat 1J?1tt'ft~~s l:it'en collecting data on like retention, th · 'f!J}! do ve~Jtdly, ye~j~J'· and flffi~s part of the fact that we have been a Univer$1~~f Oppo_!(~nity, so ~fft going to look bad on those numbers. But th~y do not give tff~i~mb~-$~19-i! make~\ook good. Thos~ are not out there. And I th1 . • t;9e of tl:\~J~tgff'mej}:~~f<?P 18',jl,~ to demographics. We know that. We Vf,, .· r,J)ha(/,~J is m&~,&R}~ould have anticipated and I think the bad ,(, · 1city that W4@Jaave ·,.:rg~{t~n from:?'~ftp way Lansing has been packaging the d~Jtjption of the~<lfJi~us l~iJ~ls has not been very helpful to us in our recruiting effdrttf~,,Thank you. ~~·~,.. ''%?~,

~!1h, •,/,z½ ~'l/'.{:),:.: ··~?, /,'.~. ,_;;;;.@' ::fd¾ ·~;::~ .1/

Governor Drike'~~,?de a moj'J~ on the three agenda items in order to place the issue formally in front olffte-~~ommit_~ The text of each motion is given separately.

::W,1/4 x.i'!J ~ll Jf;ffjr,'Z

MOTION by Gof~m;~~Oriker and seconded by Governor Massaron that the Budget and Finafi~ Committee recommend that the Board of Governors approve the FY 2014 tuition rates and mandatory fees as presented. In summary, the base tuition and fees for Wayne State University are increased by 8.9 percent for resident full-time (students taking 15 hours per semester) for undergraduates and 4.0 percent resident for graduate programs.

In terms of mandatory fees, WSU requires all students to pay a registration fee (per semester), a fitness center fee (per semester), and a student services fee, formerly called the Omnibus fee (per credit hour). The registration fee is increased by 6.0 percent, while the fitness center fee remains unchanged. The


student services fee rate will increase by 6.0 percent for both undergraduates and graduates.

Further, the Committee recommended that the Board of Governors authorize the President or his designee to make adjustments to the rates for special programs or where otherwise appropriate.

MOTION by Governor Driker and seconded by Governor Massaron that the Budget and Finance Committee recommend that the Board of Governors approve the FY 2014 General Fund budget, it~{:,fOjected revenues and expenditures, and the budgets for individual U9J;1(,~ty units and specifically funded programs as summarized. Also, the~B~~l .Governors authorizes the President to implement the budget man~i~:i fnl{)Jocedures, and budgetrelated policies with such modifications .~... ~y be cJ~r:qed necessary during the fiscal year. ~. ~:fj; ~~~

~~ ,,.f@, ~~ ~:% Further, the Board authorizes the Pre~Jint to make budget aefJJ!!ments and/or

recommend tuition adjustments to the ,:ii,.§fd in SkJ~cient amofftli~o offset an initial or subsequent state ~,gpropriation ¥(¢JJi ..:fd~tment from vflt~ffOjected amount as shown in the pr~'tft~~~ FY 2014 '. . "'' Fund budget. ·~/

~~i~ ~ ·~··-:~{9;,. ',;,®A; ·,,.@: <17,1'~. 'l,;;:m.

MOTION by Governor Driker ~~ sehij~~~ by Gij,4t!or Massaron that the Budget and -~~~J'.t~:,Committef~ecom·f.W!§~Jhat rfif~Board of Governors approve the f~fwr~$:g~ets for (lftAu)SOJtf-'A'i1,t)i~ unit§ as presented.

ef@7 '/,~. ·~i~P -;;~~p -~-- ~ ~ W/ ~~ 1~ ~.

Members of the Board 3($~verr:i~.-made the ~lowing statements: . ~~:, ~~·· "*~ Govemlf •$~. '{~fff;/~-~W?f~h.'.refj~ ~ ,;~:;, {;~}, ;~>::~; .,t't~~students a«tJ~JI otfi~~~ who are interested in this tuition question should uneif~tand the effcf~hat tfr(4,Jministration and the Board of Governors have put into e~jdering the ii~tion ~ifrnd ourselves trying to resolve in the most sensible way po~.®J· I enrollEr~j n this institution 58 years ago. I was the beneficiary of the low tuition,'¾j~ my wif~?i~s in the 1950s. My son and his wife were graduates of the Medical .sch~}~"~¾-~ benef_iciaries of. low m.edical .. school tuition in the 1990s. Nobody 1s more~f!J.~S1e to the impact of 1ncreas1ng tu1t1on than I am because I had to pay it when I ~fked my way through this school, and my wife and various members of my family went through the same process. So I feel this up close and personal. But what I remember vividly when I graduated the Law School in 1961 is that not even the top student in my class could get a job at any downtown Detroit law firm in 1961. That was because the reputation of the University was not where it should have been. Now, every downtown Detroit law firm is run by graduates of the Wayne State University Law School and heavily populated by them. And the reason that that has happened is not through magic; it is because over the years the reputation of the Law School as part of the University has increased dramatically, and that is because we have had better faculty, better facilities, better libraries. So the


1164

employers finally woke up one day and said that this is a great university with a great Law School. I mention the Law School only because that is where I graduated from. The same is true about the Medical School, the Engineering School, the Nursing School, and the Pharmacy School, the entire University.

The value of a diploma from this University depends upon what an employer sees as the value of the education that has been received from the University. Employers are not going to applaud a student and say "I want to hire you because the university you graduated from had the lowest tuition in the state." That is not the criteria that the employer uses. The employer wants to know what is the quality of the education of the graduate sitting before her or him, and that is .. ~jmly based on the quality of the faculty, the quality of the labs, the quality of the ~~fes, the quality of the facilities. And we cannot maintain, le~ ~lone !ncrease, thJ:1 .. J.ifff!t by being the cheapest product around. That does not do 1t 1n a field wherej'.ff~~ll~j;,~nts so much. We cannot be the Costco of universities and figure that £-Mt g~duate~~rf going to be greeted at the door by employers throughout Detroitf,fffij?southeaster'~:Michigan and around the state and around the country. 4[m~.w ~~}:

·WA:ir 'l6'.?7z ·-.~ 'l~,,,

So what we are doing today, we undeij),.Qd is go·; g to inflict ~,00~ real burdens on students, and it is not done. cavalierly. Er~I, o Jfhink anybod~}&1ore sensitive and more knowledgeable ~tif(:f '.M:,budget ma Professor Mclrf~e, who knows WzZ¼ '"1,4' a lot more about the Univei'9.) ~ ~~et than I u~&!xcause he spends a lot more time studyin~ it. . To hear him:" ~f~~J the n~Efj~pnfirms to me the wisdom of supporting this recommendat10 ·fJ,S d1~,j!~€1S 1t mlfl , because we cannot cut our way to ~ fut~re )1~~~ have ~? inte~fi¼~~:,~pen ~,r resources to be sure that the Urnvers1t~.m'frnfat~cnd e~ff@j~~Ji}!U{~~j? ti at peopl~, when they wa!k across the (ifle and g~j,at p1ece~,per, sa~_?got something of Value that IS

going to transf~~;:J,nto a jd~j>r a caree~ -:-7,,.;,•,;, %{,}-' ~

··%;'~,, •~-~-, ~ It~·. :~~~1v,,1Jsturb1ffi,~g~'.f,ai{~1;,9fess(i~.M. clntyre alluded to this, that there is not a ~½1,fZ/llh~~.w,~ l!p~w '~@ v~:?,; ~V~{ "r,,f5ei;>$jf tton ·1~ arious p1~pj taroughout this state that Wayne State

fj~ersity edf~t,~ th~)Jdren of .,,~igan taxpayer~ a.nd is being punished for ['j}a so. About §t!e1cenf.:(~~r students come from M1ch1gan homes. Some of our sisi(~[lstitutions h~~almos~!Wf of their students coming from out of state. That transff'@&. into captuff~:. an ent:>r'mous amount of out-of-state tuition that balances their bub(~· We ha{~ever done that. We have tried to focus on educating the children of1til!c>higan r~(~ents, and our graduates, by and large, remain here. So there is an inmfjfe!in~.@'/fistic that we just looked at that although we only get 14% of the entire state·~~~~lation for higher education, we are now graduating about 45% of the medical doct&fs from all the state universities. So the state is getting a payoff of more than 3 to 1 in terms of doctors produced by Wayne State University versus the investment they put in Wayne State University. And you look at similar numbers in the Pharmacy School, in the Nursing School. The resources that are given to Wayne State University versus the number of graduates we are producing in muchneeded disciplines is simply out of whack. It does not recognize the contribution that we make to this state.

So, I hope the students who are represented by two members of this committee understand that we are not blithely saying, "Well, let's just pass the increased cost


down to the students." First and foremost, we are increasing financial aid by 11 %. And when we use the word "financial aid," it is important for everybody in the room to understand we are not talking about loans, but about outright grants. This is money that is given to students that does not have to be paid back. And we are going to increase that by 11 % to help the students overcome what is clearly a hefty increase in tuition. But if we do not do this, if we do not take this step at long last - which frankly we have been skating around for some years, hoping that funds would come from other sources and that hope, at least to date, has not been fulfilled. We have to do this now. For the 1 O years I have been on the Board, we have ignored something called "deferred maintenance," a term that kind of barely explains an enormous amount of money that is needed to keep the buildi .\~, equipment and facilities here in top shape. And what a pity it is to invest tens o i6ns of dollars in a building and then not maintain it. That does not make a lot o · .. d sense. In my recollection, and Jim Sears can correct me if I am wrong, mY.( f1!9r is that the national standard is to invest 2.5% a year in maintai~ing_ t ,!};;;Ijt.11 clings~j'l_!?~r !nve~tment is less than half of that. So we are not even mainta . .flfmhat we ar~(u;Jd1ng right now; that does not make good sense. So, I supp ,"fs', recognizing t~jll is the least pleasant alternative, but I believe it is necess' , . Qr the future of the umi~sity.

-~~ ·~& ; 'q@, 4,}~ ,~~-

Governor Dingell . ,, . ~:?6>,&.~-=9 %~ r,.b,,, ··P ··:~ I would first like to say that fij,.@f;(Jt.b~en one ot!iimost difficult of times since I have been on the Board. I have :;;t~#~~olleagu~tjflect upon the decisions made today, and I want to say that tt·f~~, has ·ii)&no confl~'f>no harsh words. Many of my colleagues_ hav~~~}tPt for wl~. Thi. rstarf~~at the impact of this is no matter wh1c1J4'~~1sff~~~e make:\j,, Our~· . areo/not at the same level as Michigan or$fflthigan. ·s@je, but ~ :"'0.e an e· ~) responsibility to maintain our institution an~f,t~>~ame '1· · r.esearc. rnegie classifications. I think it is critical to this institution, mtt~Qit, sotffl.,eastern M~m1~an, and the state that we do so. Our peer

.~~~ d;?{b 1/b;; .. z~. -:%/"' ins· -f~)l».~ bo(nt~~t11lan?l,g~~-Micfi1·_~)1 State -have an out-of-state student

,,,mfftt~~t;J;ays·W~_ch higftl$~~fflfnat helps cover the cost, and their tuition ,,,, s are far a'B;~~-thos~.:fil Wayne Sf~,-and well above the average of the other 15 '~l:.ljgan universfdfa. ouf~~l:>lem, as we are looking at it today, is that we must su~f1ij Wayne Sta'f~teadiri~\~earch role based on the tuition income of the non-resei~t~ichigan u~i,rsities. w~ are dealing with the fact that our state legislature has dee,(~ that high~ ducation is not a high priority for Michigan, despite the fact that the bClt~.e,ss co ,:c. nity of Michigan and institutional leaders have recognized that our rese~~i.mix. ,:;)lties are the primary engine for the state's economic growth. ';~: ... ~r,·~ .,,0,.0?W We find ourselveffef@] t now - I have said this to my colleagues and I will say this publicly today - having to face the limitations on our basic funding source, student tuition. That limitation dictates that we must begin under the new president to examine the question of what is the right size for Wayne State University. We need to examine whether or not we need to be doing all the things that we are presently doing. Such an examination needs to be done very carefully under the very strong leadership of our new president. It needs to answer the question, What are the basic priorities of this university. Are there things that are more or less important to our diverse mission? And are there things that, while they are valuable of themselves, we cannot afford to keep doing them given the funding limitations that we face in the


1166

future. I said this to my colleagues - it is a word I used coming out of the auto industry - we must right-size this institution. We cannot go down the same path that I saw and that others have seen in the auto industry and that we're seeing Detroit in right now. We cannot ignore what is happening in the real world. Our tuition has gone down, and we need to try and turn that around. But we have serious things happening here, and we are going to have to make difficult decisions for the university given our reality.

This is the hardest thing I have ever done. I deeply respect my colleagues and no Board member who is sitting here thinking about this today has a good option for a decision on this matter. I cannot vote on that tuition ~l~ase today because of what it means to the working families of Michigan. Bu ~tlo so not happily because I understand my vote means continued dimin-i :~lresources to Wayne State with potentially devastating consequences to thJ@1,if~w,~, Southeast Michigan, and I believe to Michigan. I believe that the le1ijl ofi-'Supp6Aft~,.Lansing is too low and that the level of tuition that we are talkin;J/4.i~t.it. is a ter~~t}l bu~den to many of our students. So I am not happy at;>~~ffilything that I a~Jo1ng today. I and my colleagues are really suffering as w'~ to do this, and I bef~.J~ a strategic plan for the future of this university is going to B~jjfical in~,.months atr~J·

~ ~~~ ' Governor Massaron .? ~$,~~ ,zy: ~::~~ ,if~ 1:?zt -~ ''" I am going to try n~t. to r~pef'~wrift~J~?r peopr~)~av~ said. I am supporting the

proposal of the adm1rnstrat1on ijY,,J re~~!~ . the tliitffi increase because I really do believe that u.1~J9,eJpadershi~( Presid -~~Jmou?qf_jg folks in the administration we have had/ ;r r1ffef:®.AJty over-ff~ la ~ :((~t. afiif1ne the economics at WSU

,(~fY/' ·WU.,fi.,. '.{/8'. @, ,, better than ,,,j~ ave hcrt:J:&>iefore, at'~· ~J,,, or the · ears that I have been on the Board. We ~lir#fG,Ciate t~leadershf~{ President 'Gilmour in that respect, but we were also in thE{i,~tion

7~~ it was :,;::J~essary to do that. With the decline in state sugj~$J»,;,:,?bsoldr~~t- *~f~~!3caut~he low tuition structure is not sustainable

,J-·efJfffg·rcf~~, wrtij, · r respd~1lMJJfX if'~er the constitution of the state, we have .Efnd up wittr'ile!ing ·o~!Jkudget a~~(iving a structure that sustains this university

W&,,research un~;ity. Efftiuse of the cuts that we have had to sustain with the his'f{Jj;\disinvestml(,iJ,1 higliW'i~ucation in Michigan, we have been right-sizing the univt'~i Perhaps Jt-~2ould n·~e done it in a more organized fashion. But ever since 1··~~~peen on t~oard, we have been cutting; I don't remember us adding.

·~~ 11 So we have ~~.JJ· doiJ' at as carefully as we could, and I think that we will continue doing that with ffi'.t~~resident. It is important to note that this has a serious impact with regards to turtrc{tf. It is important that we understand that our obligation is not just simply to the students this year, and the following year, but that our obligations are even longer than that. We have existed since 1868 and we will be around in 2068, and we will have an effective urban research university in Detroit, Michigan; and we will have a rebirth of Detroit of which Wayne is one the major leaders. Those are all the commitments that we have and what we are trying to sustain by making this decision. So I support the recommendations and I appreciate, President Gilmour, the decisions that you made to lead us through. It is an extremely difficult and unhappy situation, but in the end it can make us optimistic about the future, not pessimistic.


Governor Dunaskiss

I will not have the opportunity to vote on this during the committee because I am not a part of it, but I will be asked to vote later this afternoon. I want to begin by saying that I also respect my colleagues and the administration for the work they have done, not only in cutting the budget in the last several years, but for how difficult this decision is. I have been on this Board for 18 years and I have been in education for 30 years. My primary concern is the disinvestment in education. I think back to 150 years ago when a sixth grade education was ample for living in an agricultural society. About 100 years ago move that to twelfth grade and that was adequate in society to get a good job in the industrial age. I think now that our state~- t~ur federal governments need to start thinking about education as a K-16 prop_~qm·YA high school education is not enough for most jobs. And although college e9J.lj ,,: 's only worth is not to find a job, it is a primary responsibility. So our state cJ~F' . ~ral government have to start looking at education at a four-year univ_ e~j,;tt esserf(~for students, and they need to start investing in that, not only K-1 ¾J[~use they i~tli~ucing there, but also in our four-year institutions. ,..ef~~J:@7 '/,*~·-

~X11~" 'o/;§:7/ V::Z'~,@, ~;;~ ••

'?z°_@ '*~ So I looked at that and I looked also,..:i'tz;the burd ,,: that we w(f~te placing on our -~,% f::£ '~~~ students. Again I know that my fellow Bo!@~ m . . ts do not lo~t this lightly but

the history of higher educa ecently has-:fi~~f: ": continue to incre~e tuition, and I q/ l'Q%/.

guess I am at a point wher . ·:Jtt9 say, Stof:>'l.®Js enough. I have to say that I can no longer look at raising tuifr\1l:: o=iff{~J~~nts as 'f~ nly way to solve the problem. Now, combined with that is f~_me -~f say '/fe had enough, but for me personally to s~~~J,~j,.~g ~t wtf(~ can ~jy.ork egislatures a.nd with state government,~~_,~jstff'~ji,..d1ng that:~s~. 11tl~j}a "'to do something to change the structur~~f,..how WE,-~ ~nd our'1@'; . ,s1ties. ~~j} cannot vote for it today, not because I do,..fWMhink if ~1, ecessa~ffe not because .1 do not think this univer~ity has done_ everytffiJJt)_ h~i*-_ · / ·!J;.? reduc~f!. cost. I do believe they have. But I am Just

JI~~~~ m_ y''l1\ft~ ."!f.1@°,W~~-~catrfR-,where I have to say stop, and I have to

IC. F4°ff'a~f~an do t<ili:iar,n this CT'nt~f~~ty;~ound. -4-..0 ~ ~ ;:f~;,,,. ·~ ~~~- -~4', -~y,

Governi ip},Nicholson •,i~ ~~., ·[email protected]::: . r~-~ ·-,;?-:::-,.

·~7,3; ·?@P ·-:r~,. '¼Z~ f®. ~::~

Maytf~~&t as eloque~t~ as myf14eers, but I will be voting for this proposal from the adminisf~l9,n. And it ~,thi es down to a few things and I think what I see is education is a very;fiJ,mpetitiv~: arket and what I see is the previous governors and administratio~~ve g~J:, 7

a fantastic job of keeping Wayne State University's tuition below its peerlf,~j,ythe future of quality of education, I think we need to reinvest the money back ',;iiZ:ffr the institution. For 2014 the no-tuition-increase is not really sustainable, and I agree with Governor Massaron that you cannot cut your way to prosperity. There was a chart that was very interesting in Rob's report on the change in the pace, and that showed that the user seems to be paying more than the state. And I think everyone in this room, whether it is administrators, professors, staff, the police must understand that when they interact with the student, they are your new customer; it is not Lansing anymore. And so I would encourage everyone to refocus on them as the customer because I do not see a trend of government reinvesting in university education over the short term. I think the likelihood is that students in


1168

universities will pay for the cost of education. And you should demand the very best education and the very best customer service.

Governor Trent

I have agonized over the decision to vote for this proposal for tuition increase and I want to explain why I am supporting it. As we all know, and it has been mentioned many times today, Michigan has disinvested in higher education for many years, and our state appropriation for this year is the same as it was in 1989 not adjusted for inflation. Meanwhile Wayne State's tuition rate has been unofficially low when compared to Michigan's two other research unive ·, s. Because of cuts in state funding, declining enrollment and other factors, t!);., : ,versity will make massive cuts beyond our $19 million we have already cut f,9~01:.: fiscal year 2014 budget without this increase. As been mentioned before, ~ji "~~!i:Jady cut $50 million from our last three budget cycles. ~,.,. ··:& .,

¼07., ::'~,,:~ ,N'jz~" '~?;,:,: 0 W/// ,,:::~

I have consistently expressed my Q,.~oncern about WfJ~e State's 9% six-year graduation rate for African Americar,it~,dents. Among the ~~tments that we will make now is the creation of the Office,{y1ulticult1!! I Affairs i~til~ first time in the University's history. This office will be frf~~-arar'~,creating st~'@'eij~s to address

,.z1o -~ '% ~/{/,/ ~~ graduation disparities for@ ·: . ents of co1~~~¥am passionate ·aoout both the university's urban mission ° i~arch miss'w.Et5 If we are to honor our research mission and compete for res , ~~~!s, the ·f~~rsity has to invest now. We also need revenue to address the v· Jius ~j;s,J.that cW'~jb,Wayne State University to be punished by th~ .· · )!l~J!-1re in tha\Jt pla. ~~~g~e i~f,m>,pY with the university's low 6-year grad~ , ::"f~ef~d we n~~io ~g,i~. f'~~!~ resdurces to our effort to boost reten~ion, ef:(f(f.tn~n~, ii'fi~raduati~j ~Jiff Bec;r'~;we understand that in .ad?itio~ to being a h1g~eJJv1ty re~rch urnve1,~, Wayne State also has an urban m1ss1on, 1t boosted our graW~t2r fi)t,/4. , ~~) aid by ~if~/o to mediate the impact on the tuition hike

;;

o t•:1~;°'m~,.who n~.;,~;z~~s~tz~)Nay;\f~,§tate University is Michigan's hometown z "0?w;,;~w&, -~.,.~~}#.'. · ,.~r,,,'::· ~r~ . PSttY/;:e.w:ijz:.£>f Olf~i.,1J9ents ~1t . 1v.11th1gan and 75% of our grads stay here.

~ re and w11~(~ain ··~i.!;}Jgan's rlsl-tch university of opportunity, but we need to ~~i; our gam~,~ am~tft;~ to be a part of that process. -~.:- .~ :::m~ ~ ~> ·:::~

Ms. Giroux a~!~ what the li).~rease ~ould mean in dollar amounts for both tuition and financial aid, as ~J;;?s how Jjh the increase would bring in overall for the University. Mr. Kohrman replied tfr~j., resid ,.$}:~freshman would see an annual increase of $900, or about $30 per week for eacf~@fJlJ.~)f weeks that the student is in school. It is difficult to quantify an individual's financial ~9j.e!cause it depends on the level of student need, but overall the tuition increase would bring'in $6 million over the current financial aid budget, or about 11 %. The University would see an increase of $13.7 million in tuition revenue over last year's numbers, for a total of $348 million.

Ms. Giroux then asked what effect the financial aid increase will have on the value of the merit scholarships that are offered to current students. Mr. Kohrman said this is a legitimate concern for the merit-based students receiving presidential scholarships, which are contracts for a certain number of years and a set amount. The administration plans to put some additional money aside to provide inflationary increases that would help offset the tuition increases.


Ms. Giroux made the following statement:

I would just like to speak on behalf of the students and say that we very much appreciate the financial position that Wayne State is in and we commend the administrators and staff who work so hard to put together a budget that is sustainable and feasible. But with the student base that Wayne State has to continue to be a school of opportunity as a student body, we cannot afford a tuition increase of 8.9%. Wayne State obviously does not have the same population of students that the University of Michigan or even Michigan State does. We have a lot of part-time students, a lot of students who work full-time and a,qfJiupporting families. We have a lot of transfer students and even undergraduate, ;-~m full-time students; many of them aspire to grad school as this is a reseie.~f~versity, whe~her _or not they are pre-med or pre-law. We are very concern1~$it~i · , effect this will have on the student body financially. A lot of our stu~ ~bvio ',bave federal financial aid or they have financial aid from the unive~~r outside s ~:\i,>,rt and donors. We worry about the effect of h~w the tuition in»~; -~ ~ill affe~t the -'~l,they have to take out and the student loan interest rate tha'f~,be 1ncreas1ng this y~~~',

~, 4w '~,. However, we obviously und~,rstand that ~~J!),.6,#this has to ~th government state funding and we woi~.J~~ to supp~,refforts to work ··Wlth Lansing to restructure education. Our j~ff~ntal affa1~,mmittee in particular will probably be interested in that. And we f,o·g~.,, he nece§&}~9f this increase. So in return we do ask, as the university seemij~~,Q be ... ;rr~0·ng to ~!?½the initiatives that have been

t;" /. ~:?~ /; ~~z")' proposed, that v.t~1· .. k toward ~(acreas1n ~~?f.TA,.acad.~i~ efficiency and tailoring of ~ ,,.:,,-;;; r,·:}?~ ·~m programs allJ·w~ · rf to the stl;l:den w ·~}fr1:tlJ-elp ·-increase graduation rates. Students m( ~rw be . pted to ·~(it(~ 16ut th.,0urses more to help defer the increase in co'l~o in th ::1 · ming yeif~ would like to, as ~ se~ate and a~ a stud~nt body, work w1tfit e ei rr,~t .. to help@~crease communication regarding maior r.e .. JJ;Jl~; ns and ... /,~-iif(ft.i£!p, rec((ffi:~ments - the things that students need to

#/4 ?-?~ei· t ::: th t ,-_.:f:;',r,?.;zl w.~ ·1 th t f 'bl f th th · a· ra:1;3~ ·. e on a a e-:::1;1i· ·.OeG~ssan y e mos eas1 e or em as e -~ esses sta~J,m~w, .~lmple ·)tj;ations of majors. So with that being said, I

, t:ik. that very welf~presenf.tthe student perspective. Thank you. ~i~· ·~ ~1, ~~1 ·~» ~~'

Before the J'~~~~as taken, lternor::fifillard thanked the administration for its exhaustive analysis of the W.9~~t situatio~i.This is his fourth ~ear on the Board, and it was the hardest the Board has wotf,f_!g. to achf lit a budget resolution. He thanked the faculty and student representatives as ~:ft,~ t ard members for their comments.

·~~.Wff/7 ACTION - Upd~~~tion by Governor Driker and seconded by Governor Massaron, the Budget and Finance Committee recommended that the Board of Governors approve the FY 2014 tuition rates and mandatory fees as presented. In summary, the base tuition and fees for Wayne State University are increased by 8. 9 percent for resident full-time ( students taking 15 hours per semester) for undergraduates and 4.0 percent resident for graduate programs.

In terms of mandatory fees, WSU requires all students to pay a registration fee (per semester), a fitness center fee (per semester), and a student services fee, formerly called the Omnibus fee (per credit hour). The registration fee is


increased by 6.0 percent, while the fitness center fee remains unchanged. The student services fee rate will increase by 6.0 percent for both undergraduates and graduates.

Further, the Committee recommended that the Board of Governors authorize the President or his designee to make adjustments to the rates for special programs or where otherwise appropriate.

The motion carried with a vote of 5-2; Governor Dingell and Ms. Giroux voted No.

~:, ,, ACTION - Upon motion by Governor Ori~• seconded by Governor Massaron, the Budget and Finance Committj~&~~/e~ded t~at the Board of Governors approve the FY 2014 GeneraJ.::t,ur,if budgiff~!ls proJected revenues and expenditures, and the budgit~f[~ individual'~l!nJversity units and specifically funded programs as su :':#fzed. Also, thef'~ld of Governors authorizes the President to implenf ij,,the budget managl',®,&t procedures, and budget-related policies with su~mod:31fica7JGf.lS as m~Y@~e deemed -~$ 1%!%,/2 ~{?; necessary during the fiscal Y,ear. .,,~,, fl ~~· .. e0,· ~, w Further, the Board authorizC'fflf~~sident tom!,,~ budget adjustments and/or recommend tuition adjustmeff~, t~'%f~J;ioard in 'i@J_£ient amount to offset an initial or subsequent state app,riatitff.@».9ing adJ~~,ent from the projected amount as sho~~~~b-~ propose~Y 2of~ff~fil,ral Fu~~f]Udget.

/ ~4.!w¼;: ~ ,~~@,½p-%~~~ ·:::;<' . ' ::?*J::, ~~ ::w'"~; ·~:, '

The motion·. d w1tli'<~ote of o~1it:~\~ ernor D1t.r§ell and Ms. Giroux voted No W;a z,W • ~ .. ,.t! .... z ...

/~z- fl@ '?m:,. '~.@'- 1P~p,:,,, ·::;;;~ 4~:,. '{~~1%~'½• ?~ g1€>~w~t#;B,9n rii~~,£ by ij$'j11Jor'®riker and seconded by Governor tJ(fsaron, tti~((~~et a[~ftJ_nance'cfcf~mittee recommended that the Board of '{!t(~Arnors appro~~;the A'.?~014 budgets for the Auxiliary Activity units as

~..:::;~ ·-:::~ ·?»:~ prei\(~ted. The me,ij~n carr(~f)),t'ith a vote of 5-2; Governor Dingell and Ms.

~½;,~ ·01//,;, -~ Girou~j~ted No. ·~x:~ ,.:;,yf

"~~~/; .. z,:;,;..:,, . ,:,'/,,,';,•, ~,;-:::?:, ',;,;:U% ~'/0//.

~1;~9), f~~ ''/h'X, tfff,;! ·1;,,~,, ,•?(.,fj

'/.'.y,;::z ~,.,;-::,½' r;,#'/;¼'rh z::%~;. The items below were ·ali if' cl in one summary.

1/,@"p

1170

CHATSWORTH TOWER APARTMENTS LIFE SAFETY, TECHNOLOGY, AND MECHANICAL SYSTEM UPGRADES

COLLEGE OF ENGINEERING-VARIOUS TEACHING LABORATORY RENOVATIONS

FREDRICK C. MATTHAEI PHYSICAL EDUCATION CENTER BASKETBALL OFFICE SUITE EXPANSION

MACOMB ADVANCED TECHNOLOGY EDUCATION CENTER (A-TEC) CONSTRUCTION


AUTHORIZATION

ALEX MANOOGIAN HALL SECOND FLOOR RENOVATION

SCIENCE AND ENGINEERING LABORATORY CLASSROOM BUILDING DESIGN AUTHORIZATION

Vice President Nork presented six recommendations for the capital projects listed above. He added the following comments:

• The project to build a suite of offices for both the men's ,a .. ; women's basketball program will be funded entirely by private contributions. . 17~[[.~f

,$[~ ;/i?'J%~

• Two projects - the Macomb A-TEC constructio,.J1J{fi't1 ,~_Manoogian Hall second floor renovation - were included as part of the FY 51] 3~6nd iss~f~

~ -~, flr1ffe7 ·.f:'~

• The design work on the Science and Engj fF,ng Laboratory Cl{~pom Building must be completed. by October 2~13 in order to z,~&,!t the project as a ·rf~er one request for State Capital Outlay funding for FY 2015. '.~n ,,1~. ·,~~

··,%,;:~,. /ff/'f {~~ MOTION by Governor Ma,~t:iIQ,n and secofft@'fl§y Governor Driktrr#that the

· ~,f0h:, 'q4i Budget and Finance Comi:JJ!If«~J;.~commena~f~t the Board of Governors authorize the President or hi~esr~~!:'JP proceeil~h project plans for the six projects listed above. ~ ',/,zt.:&~i-

2 ~~,, ·~w.b WxE::z, ·,;~7>.,

~.&@~' ~ "'w,!'~;,,. ~~ Professor McIntyre ::Wfff~{i'<;J. that t~ f ~ $'· m'~t~. in 1/,~articular are examples of successful collabo;4 betwO~he facui~ he aa'll.i'@stratlon. The faculty believed that Manoogian HaW~~s of if' '. igher pdq~-~han State Hall, and the administration eventually agreed and f?/..;-... h : ding for tltflwoject. He said that if WSU is to compete :A'ith oth. e~rJJP1¥i~~~ ~or . . , z :ff?~jJJJ:iavetft!-class facilities, and this project is a very import; .. ~fi"ty~ri .fl:f<:1fJ:t1rect10 · lw~>- . ,~~:;:,,<, c.$' r<#:P ,,~ ,,.¾ <·;,'q.,;~.

'~ .,~,?~'l, ·,~h 'q,~, His se&(~h.example w/~f~e sd~i~ and Engineering Laboratory Classroom building, and z~.,, •,:?~a ',m:;;;, Professor''v,.tj~J,ntyre descrr~itj. the ,,r(~J,;!.SUltation process that took place between the Academic S$f~Jj and the a({iJxiistraticfr:i:? The budget and policy committees of the Senate had serious rtii(i~)vings ab&,'~ the administration's original plan. After considerable negotiation, the ;;rei~}Jg,istratioq{jd the faculty arrived at the recommendation that is being presented to the cd{tf.!tijJ,_te~/4[~rofessor McIntyre emphasized that the plans are not set in stone, since the consl1ffft~~~rocess will continue, and in the end the building will be far more useful to the Uni~~y than it would have been without consultation. Professor McIntyre commended the administration for working with the committees of the Academic Senate.

ACTION - Upon motion by Governor Massaron and seconded by Governor Driker, the Budget and Finance Committee recommended that the Board of Governors authorize the President or his designee to proceed with project plans for the six projects listed above. The motion carried.


The texts of the individual motions are presented below.

1172

Chatsworth Tower Apartments Life Safety, Technology, and Mechanical System Upgrades

ACTION - Upon motion by Governor Massaron and seconded by Governor Driker, the Budget and Finance Committee recommended that the Board of Governors authorize the President, or his designee, to solicit bids and award contracts to design and construct various upgrades to Chatsworth Tower Apartments life safety, technology, and mechanical systems for a project cost of not to exceed $1,850,000. Funding for this p~!·i .t will be provided from Housing Auxiliary Operating Budget ($1.2 milli Ai~Yffcj the reserve for nongeneral fund equipment and facilities ($650,0 :~e balance in this reserve is $5.4 million at June 10, 2013. The motion,,, a~~

$ z, ,;?~,,

College of Engineering- Various Teaching L.,f~-atory Ren,ipns »,~-~:{/,, ~

. ~ ~~/ ACTION - Upon motion by Governijjtf1assaron and secor'lij!i,,, by Governor Driker, the Budget and Finance Comffl;~~e recojg,mended tha'~,£ Board of Governors authorize the President, or his{t.f~~2',~ proceed wit~Ji design, solicitation of bids, and th ·. rd of contrlttf~JsP'construct varioJ'~eaching laboratory renovations withr "''~llege of EiffJ!-¾ering for a project cost not to exceed $1,200,000. Fu·,., ~ ,.i;ff~)lis proje6t~11 be provided from the Provost's Academic Program ·~~~stmf@ !;idget ff_m_,2,000), the College of Engineering o~~)1]1J¾«budget ($'~~.000 , if,&om tW~Jyferred maintenance reserve ($2q,j~itfP~1t~j deferrif~tm f.ff~~serve balance was $1.1 million at Juf:ti~. 2013'%r~e motioni\ :::~

"<i~ ~· ·:rm ~ ~~ ,: Fredrick C. Matthaei P~~J~al -~zlJtion Ce , Basketball Office Suite Expansion

,z;,~ ::::w,,. ~#~4-l'P~~/ {it -~~;?:~!+,, •%:'?.h~- <:[email protected]., -',,,:?'~ . ~~'*on mot{.~1:1, by GovEf{ft~ Ma~saron and seconded by Governor

~ er, the Blf~jt_anJ1ftance c'ciffi~j'ttee recommended that the Board of '~)l~rnors autho'rf{~the P~j ent, or his designee, to solicit bids and award co~ s to desig~\d co / . t an expansion of the Matthaei Building to hous .. ,)f!ices and !J~r facif e's for the men's and women's basketball prog~am~\~ c?st noij~exceed. $585,000. The project will be funded entirely by private tl"¢.,&at1ons toj~ Athletic Department.

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A separate but ~t~ reject to move an existing waterline that runs along the North side of the?':fffifding and repair and/or replace concrete sidewalks and landscaping will also be completed at a cost not to exceed $180,000. Funds for this project will come from the deferred maintenance reserve which had a balance of $1.1 million at June 10, 2013. The motion carried.

Macomb Advanced Technology Education Center (A-TEC) Construction Authorization

ACTION - Upon motion by Governor Massaron and seconded by Governor Driker, the Budget and Finance Committee recommended that the Board of Governors authorize the President, or his designee, to award contracts to


construct the Macomb Advanced Technology Education Center (A-TEC) in Macomb County for a project cost not to exceed $12,000,000. This value includes $750,000 which the Board approved on February 6, 2013 for design phase. Funding for this project will be provided from the sale of Series 2013 General Revenue Bonds and Extension Center carry-forward balances. The motion carried.

Alex Manoogian Hall Second Floor Renovation

ACTION - Upon motion by Governor Massaron and seconded by Governor Driker, the Budget and Finance Committee reco mfJnded that the Board of Governors authorize the President, or his design ·'':(iroceed with the design phase activities for the renovation of the secOJl r of Manoogian Hall for a cost of not to exceed $400,000. Funding fq_,¢,ffl ~~.ct will be provided from the sale of Series 2013 General Revenueh~.i'-rt:r. The~yon carried.

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Science and Engmeenng Laboratory Cla;;sio. m Bu,ldmg Des1«~~uthonzat,on ~F '>;,"':;;::;.

-~ ?~~ ACTION - Upon motion by Governof~~jssaron i:.id second~~l;>,y Governor Driker, the Budget and Fin~nce Commlttf~l~'frtrended that'.j3oard of Governors authorize the ~,mJjtent, or his ~f,tre, to solicit pro~als and award c~ntracts to progra~~}i~~.e~atic'" ~gesign a new Science and Engineering Laboratory Clas§f!,9~ij~¼!1,ng at a~f~ not to exceed $750,000. Design documents must be cl':(~,pletf~J@:. ctobe(·~l1:,3 and will be used to support a proje .tl\~ing requer~9 be s· ' ~ to 'tf:f~9tate of Michigan as the Universi~' :i~~;;§i,ety FY ffi.5 Smtfa ~!$!~ pr~ect. Funding will be provided frc( z sal~JA Series <'t~&enera'f~~jtrenue bonds and State Capital Outlay:;fjJ:l~S, if a~fded. The ~ffion carried.

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The fi~IDt~ommendat~ ·ce ~ff~~rnt Nor{~resented to the Committee was a proposal to change·:.::~. Common . ), Funa{lt~.tute with respect to distribution of funds from the endowment."~ rently the <\jiersity af§f'ributes 5% of the rolling three-year average of the endowment val~. nd the rl'f~{ mendation is to gradually decrease that amount to 4.5%. The plan is t? fre he dolla~. J,at w~re distributed in 2010 until those dollars equate to an amount that 1s equa ~ :·~:-5~r-f~e rolling average from the past three years.

~l~&r This is a necessary ste{fl!Efc:ause the University has a fiduciary responsibility to not only support itself today but in the future as well. The 5% amount is based on an estimate that the fund could earn an 8% annual growth rate offset by inflation. The University's investment advisors and others in the investment community no longer feel the 8% figure is sustainable. In addition, many of WSU's peer institutions have revised their policies to reduce the 5% to 4.5% or even lower. Mr. Nork added a reminder that even with the change in policy; the University must still continue to grow the endowment through contributions in order to ensure its sustainability throughout the life of the University.


ACTION - Upon motion by Governor Massaron and seconded by Governor Nicholson, the Budget and Finance Committee recommended that the Board of Governors approve the revised Common Trust Fund statute (WSUCA 2.73.05) as presented, with changes becoming effective October 1, 2013. The principal change is to reduce the annual distribution rate from 5.0% to 4.5%. The motion carried.

ADJOURNMENT

There being no further business, the meeting adjourned

Respectfully submitted,

ulie H. Miller Secretary to the Board of

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~~i.J~., ,. .,. - Board of Governors - Wayne State … · FY 2014 GENERAL FUN0':1BUDGET FY 2014 AUXILIARY FUND BUDGET ... Kohrman also presented a chart explaining the rates for various

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