xt7j6q1sft13 https://exploreuk.uky.edu/dips/xt7j6q1sft13/data/mets.xml Lexington, Kentucky University of Kentucky 20030218 minutes English University of Kentucky Contact the Special Collections Research Center for information regarding rights and use of this collection. Minutes of the University of Kentucky Board of Trustees Minutes of the University of Kentucky Board of Trustees, 2003-02-mar18. text Minutes of the University of Kentucky Board of Trustees, 2003-02-mar18. 2003 2011 true xt7j6q1sft13 section xt7j6q1sft13
MINUTES
Meeting of the Board of Trustees
University of Kentucky
1:00 P.M.
March 18, 2003
18th Floor Patterson Office Tower
Minutes
FCR 1 Proposed 2003-04 Tuition and Mandatory Registration Fee Schedules (Submitted to Board)
FCR 1 Proposed 2003-04 Tuition and Mandatory Registration Fee Schedules (Amended and
approved by Board)
FCR 2 Room and Board Rates 2003-2004 School Year
Financial and Benchmark Charts
Minutes of the Special Called Meeting of the Board of Trustees of the University
of Kentucky, Tuesday, March 18, 2003.
The Board of Trustees of the University of Kentucky met at 1:00 p.m. (Lexington
time) on Tuesday, March 18, 2003 in the Board Room on the 1 8th Floor of Patterson
Office Tower.
A. Meeting Opened
Mr. Steven Reed, Chairperson, called the meeting to order at 1:12 p.m., and Ms.
Elaine Wilson gave the invocation.
B. Oath of Office
Paul Van Booven, General Counsel, administered the Oath of Office to the
following new member:
Joseph Matthew Ruschell, elected by the students to fulfill the term of Timmy G.
Robinson, Jr., for a term ending June 30, 2003.
C. Roll Call
The following members of the Board of Trustees answered the call of the roll:
Mr. Paul W. Chellgren, Dr. Davy Jones, Ms. Pamela R. May, Dr. Robert P. Meriwether,
Mr. Billy Joe Miles, Dr. Elissa Plattner, Mr. Steven S. Reed (Chairperson), Mr. Joseph
Matthew Ruschell, Mr. C. Frank Shoop, Ms. Marian Moore Sims, Ms. Alice Stevens
Sparks, Ms. Myra Leigh Tobin, Ms. JoEtta Y. Wickliffe, Mr. Russ Williams, Ms. Elaine
A. Wilson, and Ms. Barbara S. Young. Absent from the meeting were Ms. Marianne
Smith Edge, Professor Michael Kennedy, Dr. W. Grady Stumbo, and Mr. Billy B.
Wilcoxson. The University administration was represented by President Lee T. Todd, Jr.,
Provost Michael Nietzel, Acting Senior Vice President Jack C. Blanton, Senior Vice
President and Chancellor of the Medical Center James W. Holsinger, Jr., Vice President
for Research Wendy Baldwin, and General Counsel Paul C. Van Booven.
Members of the various news media were also in attendance. A quorum being
present, the Chairperson declared the meeting officially open for the conduct of business
at 1:15 p.m.
D. Consent Agenda
Mr. Reed entertained a motion for approval of the February 25, 2003 Minutes on
the consent agenda. Mr. Shoop moved approval of the Minutes.
Ms. Sparks asked that there be a clarification on page 14, paragraph two, of the
Minutes. The sentence states "....Ms. Sparks brought all these things to Board
members." She said that she never, at any time, brought anything to the Board members.
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The report pertains to the committee looking into the review of the Athletic Department.
The committee submitted the report to the President, and then the report was revealed to
Board members. She asked that the Minutes be clarified unless Ms. May had a different
opinion. She said that she did not think that she ever did bring things to the Board.
Ms. May said that she did not have a different opinion. She said that Ms. Sparks
certainly went through channels, and it came back to the President who then presented
that report to the Board.
Mr. Reed thanked Ms. Sparks for the clarification. He called for a second on the
motion. Ms. Sims seconded the motion, and it carried without dissent.
Mr. Reed noted that the meeting was going to be short, and he called on
Chairperson Chellgren for the Finance Committee Report.
E. Proposed 2003-04 Tuition and Mandatory Registration Fee Schedules
(FCR 1)
Mr. Chellgren, Chairperson of the Finance Committee, reported that the Finance
Committee met that morning and had a very brief agenda. There were two items, FCR 1
that deals with the tuition and mandatory fee schedule for the forthcoming academic year
and FCR 2 that deals with the proposed room and board rates for the forthcoming fiscal
year.
Mr. Chellgren said that the recommendations of the administration were spelled
out in FCR 1. He noted that the Board is anticipating a comprehensive discussion of
these subjects but to initiate the agenda and the discussion, he moved the adoption of
FCR 1. Mr. Shoop seconded the motion.
Mr. Reed said that President Todd was going to make an extensive presentation
about FCR 1, and he called on him for his presentation.
President Todd said that he wanted to try to give the Board some backdrop for
this action item. The Legislature just passed the budget last Monday. There have been
some people working quite diligently to try to pull all this together because the University
must send letters out to freshman for their awards by April 1, and the Admissions Office
needs the data. That is one of the reasons that this special called Board meeting is being
held at this time. He said that he regretted that the students were not on campus, but he
was very thankful that Mr. Ruschell was willing to cancel his airplane ticket to Florida
and not go on Spring Break. The Board owes Mr. Ruschell a debt of gratitude for staying
in Lexington. He said that Mr. Ruschell had talked to a lot of students and would have a
discussion later.
President Todd reported that there were some good things that came out of the
legislative session. The University received the full $120 million bonding for "Bucks for
Brains," and this is the third round for this program. This will help the University
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significantly, and it is greatly appreciated. The University also received some authority
from the legislature to build a $46 million dormitory. This will provide approximately
500 beds for the students. In addition, the University received some bonding authority
for a lease/purchase agreement for an apartment complex on Virginia Avenue. This
bonding authority will help the University with its housing issue.
President Todd reported that there was about $18-$ 19 million put back in the
budget after the legislature did the cuts. The University received $3.7 million of that
money. He said that it was a tough session, and the administration spent a lot of time in
Frankfort.
President Todd said that he wanted to let the Board know that the University has
been in its current financial position for some time. He asked the Board to set their minds
back to September 2001 timeframe when the Board discussed tuition, and the
administration asked the Board to pass a 5.5% increase in tuition for that period. The
administration said that it wanted to go ahead and pass a 5.5% tuition increase for the
next period so that parents and students could start planning. He said that the earth has
shifted somewhat financially since that point in time. The University's original
appropriation in 2001-2002 was $313.6 million. Governor Patton had vowed to try to
keep from cutting higher education, but he ended up with a $6 million cut that the
University had to deal with on a non-recurring basis because it came at a point in time
where the administration had to find the money to pay that off. That also lowered the
University's base and became a recurring $6 million decrease.
President Todd explained that the administration then revised its budget to $307.6
and that is what the University started with the next year. Though it has not received a
lot of visibility, the legislature also cut $8.6 million this year. He said the University has
already paid salaries for about two-thirds of this year. . He said that he would show later
in his presentation where they are going to have to figure out where that money is going
to come from in the budget. He pointed out that this cut also lowered the base. When the
University goes into 2003-2004, it starts with $299 million. Of the $19M the legislature
added back to the higher education budget, the University got $3.7. Therefore, the
University's operating base now has been revised to $302 million.
President Todd said that the administration had heard a general comment that
higher education was cut 2.6%. The Council on Postsecondary Education (CPE) has
been applying benchmark funding for some time, and UK is deemed to be closer to its
benchmarks than some of the other institutions around the state. Instead of getting a
2.6% cut, the University got cut 2.89%. The benchmark formula costs the University
about another $1 million above the 2.6% cut which made the cut $8.6 million. Since the
University is deemed to be close to its benchmarks, it did not get the across the board
percentage increase in when the $18M was added back to the budget. It received less
than that. Therefore, the University got hit going down and going up. He reported that
the University is $11 million down from where it was two years ago.
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President Todd showed the cumulative effect of what has happened to the
University's budget. He referred back to when he came into office and said that nobody
said it was going to be easy. He talked about the $8.6 million cut for 2002-2003 and
noted that $3.7 million was added back in the 2003-2004 budget. He said that there has
been a cumulative loss of $31.5 million at the University since he took office. The
University has absorbed a lot of that by using what fund balances they could find, by
changing the overhead structure, and by putting in several things that they talked about
last year. He pointed out that not only has the University lost this money, but, in addition
to that, the administration has had to find recurring dollars to try to reduce the health
costs for the employees. The University increased its coverage for the family plan from
32% to 54%. The team that does the budgeting at the University and the faculty and staff
have done a wonderful job of dealing with the situation that the University has faced.
President Todd then reviewed a slide that shows the actions that the
administration has taken in order to comply with the $8.6 million that has to be recovered
from this year. The University froze hiring approximately three weeks ago. There have
been quite a few faculty and staff openings, and by keeping those positions open, the
University can recover some of that money. Job reclassifications are being restricted
which means salary increases for people internally that are moving from one job to the
other are restricted. Out-of-state travel has been restricted. Equipment purchases and
personal services contracts have been reduced. Energy conservation is also being
monitored. The efforts are under way in order to try to find a way to absorb that $8.6
million.
President Todd reviewed the funding requirements for 2003-204. He said that
basically the $4.9 million that was lost in the cut process has to be replaced. He
explained that being down $8.6 million and up $3.7 million means that the University is
net down $4.9 million. He said that it is crucial that there be a 3% salary and benefits
increase for faculty and staff. He reminded the Board of the 3% one-time payment to
faculty and staff last year. The faculty and staff had faith in the administration that it was
being done because of tight financial times for the University. That one-time payment
did not go into the faculty and staff base salaries, and it did not go into their retirement
plan.
President Todd reported that the University lost, relative to its benchmarks, two
percentage points in faculty salaries. The faculty salaries now are $10,000 below the
median for the benchmarks, and the University is $1,500 below the last benchmark that it
was compared to. Faculty salaries are an area of deep concern for the administration, and
it feels that it has to go with a 3% increase this year. That increase is in the budget.
President Todd said that the institution and the employees have done a super job
of keeping the health fee increase down below 10%, and that has been a lot from the
Medical Center side and a lot from the people being more educated with the health
literacy program. He said he did not feel that they could give the employees a raise and
then take it away with health insurance. He explained that $3.8 million is needed to
assure the faculty and staff that their health care will not go up. There may be some
changes in co-pays, but as far as their monthly expenditures, that amount is necessary.
He said that there are fixed costs such as utilities, operating costs and just general
inflationary costs for $2 million.
He reported that the need-based scholarships are something new that has been
added. There is $1 million that Linda George, Director of Student Financial Aid, can use
to help with need-based situations so the students who will feel the impact of the tuition
increase can be given some financial support that will come to them prior to them having
to take on any additional debts. This is an effort to try to keep these students from feeling
the brunt of the increase.
President Todd said that the administration's goal is to get the operating money
that is needed to run the institution. It is not to tell the people in the lower income
bracket that they cannot come to the institution. This million dollars is a new pool of
money, and it will be turned into UK one-year grants. He reiterated that this new
scholarship money is another reason that the administration must move quickly with this
decision so the materials can be prepared and letters can go out to students by April 1St.
President Todd reported that the University provides a lot of scholarships. He
said that it is not as many as he thinks they need to be giving, but he is working on that.
He mentioned several tuition-based scholarships (Singletary Scholarships, Merit
Scholarships, Governor Scholars, and Governor School for the Arts), and pointed out that
when tuition is raised, it costs the University money for all of those scholarships. When
you total that, $3.6 million is required to supplement those scholarships. He said that the
University's need for right now is $24.3 million. This is the need that the University has
to make up. He said that the following slides would show where that money is going to
come from. With the tuition increase that is proposed, the University will get back $14.5
million. This will bring the need down to $9.8 million.
President Todd said that the Provost model savings, as the University goes to the
one-university concept, should net about $2 million out of that effort. That will get the
need down to $7.8 million. A reorganization of the Medical Center Chancellor's Office
and Medical Center is in progress.
He said that they are going to continue to push overhead cost recovery, going
back to those units who can find other ways to pay for their expenses to get them out of
the general fund as much as they possibly can. He noted that they have done quite a bit
of this already, but they think they can do more. They anticipate an approximate $1.8
savings in that effort. That still leaves $6 million that will have to come from program
reductions from both the academic and non-academic side. Provost Nietzel is working
with the Deans and giving them some targets to cut. This will not be across the board. It
will have to be targeted in ways to find that money. It is important to know that even
though a tuition increase is proposed, it is not without pain. Program cuts is an area that
the administration would prefer not to have any reductions, but that is the only way they
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can see that they can do it in order to keep the tuition increase to the point where they are
presently proposed.
President Todd said that he wanted to try to put the Board back in time to
September 2001 when the University thought it could get by with a 5.5% increase. He
said he would explain where the administration was mentally at that time versus where
they are now. He said that they felt the University's funding needs were $15.2 million
back in September 2001. They thought the University was going to get $4.7 million from
benchmark funding from the legislature; however, that did not materialize. At that time,
the administration had planned a 5.5% increase in tuition, and they were going to go after
another million dollars of overhead recovery. They had not planned to do the Provost
model savings for another year, and they were still going to reduce programs by $4
million to make up the $15.2 million needed. This would be for salary increases and
other increases shown on the previous slides. He noted that there was a $9.1 million
difference between the two slides. The proposed actions are actually bigger than that
because the University did not get the $4.7 million that they had been counting on. The
proposed tuition increase is $9 million more than expected. They are reducing the
overhead another $800,000. He said that the savings from the Provost model has now
been added in, and he had hoped to use that savings for other purposes, not for this
balancing act but that is what the administration has to do. They have increased the
program reductions to make up for this $9 million. When they thought they could get by
with a 5.5% tuition increase, it was because the administration thought they had more
money coming to the University. They did not expect some of the cuts that were coming
down.
President Todd then reviewed the proposed annual tuition and fees schedule. The
undergraduate resident students' tuition would increase about $260 per semester. The
fees increases are $64.00 per year. He noted that the LCC rate of increase is less because
they are further away from their benchmarks than any other institution in the state. When
benchmark funds were applied, they were cut less. When the $19 million came in the
pool, they were given back more; therefore, the administration has been able to keep their
tuition increase to a smaller number.
President Todd displayed a slide showing the total tuition fees, the amount of the
increase on an annual basis, and the percent of the increase. Again, he pointed out that
the percent of increase on the LCC side is only 9.26%. He explained that they tried to go
for the same dollar amount on the non-residents. A few years ago, the out-of-state tuition
was increased 9% two years in a row, and it cost the University some enrollment and
some dollars. Last year as well as this year, a decision was made to go with the same
dollar amount with the out-of-state students as the in-state students; therefore, the
percentage does not look as high. There is still a significant difference in the out-of-state
tuition and the in-state tuition.
President Todd said that a lot of parents would look at the per semester increase in
total tuition and fees. The amount of increase is up by about $300 per semester. He said
he was just focusing on the undergraduate tuition because that is the bulk of the issue.
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He then reviewed a mandatory fee slide, showing the breakdown of the fees. He
reported that some of the fees had not been changed for many years, noting the Student
Health Fee has not been changed for eight years while the health costs has gone up
significantly. The Athletic Fee was approved in the early 1990's to allow students to get
discounted tickets to athletic events. The Student Government and Student Senate last
year passed on raising the Student Government fee by $6.50 and the Student Activities
fee for things such as better concerts by $4.00. The Student Center fee had not been
raised in 20 years. He reiterated that the Student Senate voted on these fees. In
International Affairs, there is a $4.00 fee that the students voted on to encourage
international student travel and international programs for study abroad. There is a
student affairs fee of $17.50 that will add several things such as counseling, support of
students with disabilities and support for some positions. He said the Student Affairs
Committee report would go into details on those things. The total fee increase is $64.00
which is an increase of 12.9%.
President Todd presented a slide showing the University's benchmarks
undergraduate resident tuition and fees. He said that this data was captured for 2002-
2003, and the University of Kentucky was fourteenth among its benchmarks. With the
proposed increase, providing all the others stay fixed, the University would go up about
three slots. He said that they had already seen that Arizona fees are going up 39%, and
others are going up substantially as well. In the state, other universities are going up 10-
15%. He said that, in his opinion, everybody is going to move on the benchmark chart.
This is not a localized Kentucky problem.
President Todd then looked at the eight-year history of what the University has
tried to do to maintain an affordable entry point for its students from a financial point of
view. There has been a total increase of 53% in the amount of $1,381.00 and that puts
UK, probably, 14th or 15th on the list. He said that he thought the administration has been
very good stewards of people's money in the state for higher education.
The administration has always been concerned about per capita income because
Kentucky is a poor state. The only reason that he would say that Kentucky is a poor state
is because it has not had as much higher education as it needs. As far as the reason for its
current predicament, the state does not have the revenues that it needs because it does not
have a diverse economy, and that needs to be changed. The University's tuition as a
percent of the per capita income for the State of Kentucky which puts the University
about in the middle of the chart compared to its benchmarks. This will probably change
some as other states shift around. He said, in his opinion, UK still maintains a very
affordable institution. He stated that if you look at the students who come to the
University, it is very likely that the per capita income for their parents is higher than
$25,000, but we do not make that argument. The University is right in the middle of the
pack of their benchmarks on the per capita income calculation.
President Todd reviewed the 2003-2004 benchmark projections for this year. He
said that Arizona, UCLA, Iowa, Minnesota, and Wisconsin are going up 15% or more.
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Then you have others that are going up between 10% and 14%. He said he did not think
that anybody really wants to raise tuition, but sometimes you have to raise it. Several
benchmarks are going above what the University of Kentucky is proposing.
President Todd entertained questions on the undergraduate tuition before calling
on Provost Nietzel to talk about the professional schools.
Ms. May asked, "What percentage of student tuition is actually paid for by the
moneys that we get from the state?"
President Todd said that was a very good question, and the answer was used a lot
when testifying before all the committees in Frankfort during the Legislative Session. He
explained that when an in-state student comes to the University as an undergraduate and
pays their full tuition check that only covers 37% of the University's costs of educating
them. The other 63% has to come from the state money. Given that the University is
taking in more students now, it is like a double whammy. The University is getting cut.
The base is going down, and the student head count is going up. A lot of people think
that the University of Kentucky is a state-supported institution, and when people write
that tuition check that the University makes money. When the underlying budget is cut,
the University loses money in volume. On tuition for out-of-state students, the
University probably does make some money.
President Todd called on Provost Nietzel to talk about the professional schools.
Provost Nietzel said he would give the Board some context about the
recommendations for increasing tuition in the professional programs by 25%. That
proposal includes both residents and non-residents, except in one specific category which
is non-residents in law where for competitive purposes, the administration is proposing a
10% increase in non-resident tuition. The overall context for this increase is that the five
professional programs are all recognized nationally in one way or the other for
outstanding achievements.
Three factors are impacting the professional programs. These programs have had
the same reductions to their operating budgets that the rest of the University has had with
respect to recurring cuts, and that is included in the figures that President Todd showed at
the beginning.
Second, each of these programs has faced considerable pressure for enrollment
increases at a time when budget reductions are being accomplished by freezing positions
or reducing positions. In some of these areas such as Pharmacy, the personnel needs for
pharmacists are profound in the state as well as nationally. The University is not only
addressing a preference by students to come to its professional programs, in some cases it
is addressing a real social need for those programs to respond to as well.
The third factor is that relative to the benchmarks, the University's tuition for its
professional programs has been losing ground over the past four years at a rate that is just
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not sustainable for the University to provide the kind of education in these programs that
students deserve and that the Commonwealth needs. In each of these cases, there have
been extensive discussions with the Deans about these proposals, and the deans support
them. He said he could tell the Board of some of the specific priorities that the deans will
address this increased revenue toward. The proposal is for 40% of the increase for the
professional programs to remain with those programs. The 15% increase for each of the
professional programs will stay in the University's revenue. That 10% between 15% and
25%, 40% of the total increase, will be used for specific projects and priorities unique to
the five professional schools.
Provost Nietzel began the presentation with the College of Law. In terms of the
University's benchmarks, UK's current tuition in Law is 12th out of 15 schools. The
median tuition for resident law is $10,370. He said that he mentioned that because in
each case when you factor in a 25% increase and if you make an assumption, which he
thought none of them would regard as a reasonable one, but for purposes of this exercise,
let's assume that no other university increased their tuition for Law students one cent,
UK's tuition would still not reach the median of these benchmarks with the 25% increase.
He said that this chart shows what the University's increase in dollars has been for tuition
for Law students over the past four years. The 1999-2003 interval gives us the time
period where students currently at UK would have been enrolled for all of these
professional programs. This is a figure that he wants to emphasize for each of the
professional programs. Four years ago, Law's tuition, relative to the average for law
schools, was 85% of the average. In other words, if UK had been at 100%, it would have
been charging the median. The University of Kentucky is 15% below the median. For
the current year, 2002-2003, that percentage has dropped to 68%. The University has lost
essentially a 17% gap relative to peer law schools in the tuition that has been charged to
those students.
Ms. Sims asked if all of those schools were top-tier law schools.
Provost Nietzel said that these are all excellent law schools. The University of
Kentucky is now regarded as one of the top fifty Law schools and his guess is that all of
the others are included in the top fifty as well.
Ms. Sims said, "My point was that we are getting a whole lot of bang for our
bucks being in the top-tier law school and being at the bottom of the tuition rank."
Provost Nietzel replied, "yes" and said that he could have an illustration of that
kind of claim for each one of these professional programs. For example, in Dentistry,
UK is in the top 20 in terms of NIH research funding.
Provost Nietzel then reviewed the benchmark dentistry resident annual tuition and
fees slide. He reported that dentistry's tuition is 8 out of 9 in the benchmarks at $10,079.
The median is $13,171. Again, increase it by 25% and assuming other benchmark
institutions do no raise their tuition, UK will still be below the median. He noted that in
1999, dentistry was at 89% of the median. This year, Dentistry has slipped to 76%. He
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said that you see the erosion of tuition support for the kinds of faculty and student support
and student services that are needed in good professional programs.
Provost Nietzel reviewed benchmark medicine resident slides. In Medicine's
case, UK is 8th out of 12 benchmarks. The median tuition for resident tuition is $13,171.
He pointed out that UK had next to the smallest increase in tuition across these four
years. Again, that produces the pattern that the Board is now becoming familiar with
which is that Medicine was at 94% of benchmark tuition four years ago, and it is now at
66%. That is a remarkable drop.
Ms. May said that she realized that Provost Nietzel is talking about in-state tuition
but asked, "What percentage of our professional school students are from out-of-state?"
Provost Nietzel reported that the percentage of professional school students from
out-of-state varies a great deal. He said that he thought the high would be Law which is
at 22%. The low is probably Medicine which is under 10%. Dentistry would probably
be pretty similar to Medicine. Pharmacy would be between 10% and 20%. He said that
he did not know on the MBA, and he would have to check it. He said he would think that
it is in the teens. He then continued with Medicine and pointed out that there is about a
30% drop in the relative purchase power of the tuition across these four years.
Provost Nietzel reviewed a slide titled Benchmark Grad. Resident Annual Tuition
and Fees, 2002-03. He said that this slide is not a profession program, but these are the
graduate tuition rates. It will mimic what the President has said about undergraduate
resident rates. The University of Kentucky is 14th out of the benchmarks. The average
tuition for graduate students is $5,580. Once again, a 15% increase, which is all we are
doing for the graduate students, will not get the University close to that median and again
shows the 15th lowest increase in tuition and fees across this period of time. Graduate
tuition was at 81% of the mean, and it has fallen to 78%. This chart helps illustrate the
schools with whom UK competes have really accelerated tuition increases these past few
years.
Provost Nietzel then reviewed the MBA program. UK is 17th out of 20 of the
benchmarks in terms of current tuition. This one is a remarkable difference. The median
tuition is $11,593. This slide also shows that UK's increase across the past four years has
been the 16th lowest, and as a share of median tuition four years ago, UK's MBA was at
54% of what its benchmarks were charging. This year UK is now at 40% of the present
tuition in the MBA programs.
Provost Nietzel said that Pharmacy is the last program. UK is 10th out of 13 in
terms of the resident tuition. The average tuition for Pharmacy among benchmark
institutions is $8,200. UK Pharmacy has had the next to the smallest increase with
respect to tuition across the past four years. Four years ago UK was at 910% of the
median tuition, and this year UK is at 76%, a 15% loss in comparison to the tuition of
what competitor pharmacy schools are charging. Nonetheless, Pharmacy has worked
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