Minutes of the Finance Committee Meeting
Of the University of Louisville Board of Trustees

The Finance Committee of the University of Louisville Board of Trustees met on Monday, January 22, 2001 at 4:20 p.m. in the Alumni Board Room of the University Club with the members present and absent as follows:

I. Call to Order

Having determined a quorum present, Mrs. Schifano called the meeting to order.

• Minutes of October 23, 2000
  
  In reviewing the minutes, Dr. Feldhoff noted that the reporting of the data was inconsistent and caused some confusion about whether the numbers were millions or thousands. Chair Schifano asked that the minutes be corrected to reflect Dr. Feldhoff's concerns. With this correction, Dr. Feldhoff moved that the minutes be accepted. Mr. Green seconded the motion, which was unanimously approved.

II. Report of the Privatization Ad Hoc Committee

President Shumaker indicated that he had asked Trustees Cogan and Mulloy to co-chair an advisory committee on the issue of privatization. Co-chair Kevin Cogan reported the Committee had met several times with (Washington, D.C.) consultant Michael Goldstein. Mr. Goldstein has helped other public and private universities shape policies that allow the commercialization of research and the creation of private revenue. Mr. Cogan asked Dr. Shumaker to read the following recommendation to the Committee:

(copy of recommendation)

Mr. Livingston asked that the recommendation require the approval of the Board of Trustees before actions can be taken. Dr. Feldhoff, a member of the advisory committee, supported the concept but asked the "HoCo" abbreviation be spelled out in the text. In response to Ms. Loving's note of caution, Co-Chair Cogan reported the ad hoc committee would pursue the appropriate firewall to protect the University from the risks of the holding company and the potential subsidiaries. The committee would make certain due diligence would be carried out regarding the legal services needed. Co-chair Cogan asked, on behalf of the committee, for the Board's preliminary approval to make decisions so that his group could develop a more mature proposal to come back to the Trustees next month. Under this framework, President Shumaker noted a significant opportunity to develop a research dialogue with the University of Kentucky, or to launch an e-learning initiative, as well as other new ventures. Dr. Shumaker stated that the initial investment would come from non-state funds, probably the President's Venture Fund or from the Research Foundation. In response to Mr. Bridgeman's question about the ownership of a student's idea if it was launched into a new business, Dr. Shumaker indicated the student would retain the intellectual property rights, but it would be possible for investment to occur in the development of the business. This was the concept.

Mr. Cogan moved the acceptance of the proposal as amended by Mr. Livingston, and Mr. Mulloy seconded the motion, which passed unanimously.

III. Review of Quarterly Financial Statements

Vice President Owsley presented the quarterly financial statement for the first quarter. Responding to a question from Dr. Feldhoff, Mr. Owsley reported that he was meeting with Kevin Miller from the Athletic Association as part of a review of expenditures and revenues. Vice President Owsley projected he would have a report in about 90 days, which Kevin and he would share with the Athletic Association Board at its next meeting. Mr. Owsley agreed to brief the Finance Committee at its March meeting.

IV. Update on Construction

Mr. Owsley presented a status report on capital construction and capital renewal projects (major maintenance) as of January 2001. He also reported that the McDonald's Corporation has agreed to raze its current facility and rebuild to complement the overall design of Cardinal Park and blend in with the park environment. The new compromise with the corporation creates a positive resolution of Phases 1A&B. Athletics supports this approach.

V. Reinvestment Strategy

President Shumaker noted that as part of the Reallocation and Reinvestment Strategy, the University committed to reducing university overhead through outsourcing, where appropriate, and redesigning business processes to create efficiencies. The Board's earlier action on privatization was a fundamental first step. Also, under Vice President Owsley's leadership, the University has redesigned a number of processes to streamline and improve the efficiency of operations. Mr. Owsley highlighted the changes in Purchasing, Human Resources, and Payroll. His staff had urged employees to sign up for direct deposit, thus eliminating the check handling functions. So far, 65% of all employees had direct deposit. Electronic pay stubs was another area where he expected some operational gains. Purchasing has developed on its website an inventory of available equipment, and the Department has begun document imaging to make filing and retrieving more effective. Dr. Shumaker noted that although these changes are not sizzle they do improve the way employees do work and reduce the time it takes them to carry out their jobs.

In response to an inquiry from Dr. Feldhoff regarding the implementation of the retirement options approved by the Board at its last meeting, Vice President Owsley said that Lawrence Nichols would be sending the information out to the University community in the next week or so.

VI. Adjournment

The meeting adjourned at 4:45 p.m.