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Finance Committee Minutes -- Oct. 22, 2001 -- Board of Trustees -- University of Louisville

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MINUTES OF THE FINANCE COMMITTEE
UNIVERSITY OF LOUISVILLE BOARD OF TRUSTEES

The Finance Committee of the Board of Trustees met on October 22, 2001, at 1:30 p.m. in Ballroom A of the University Club with the members present and absent as follows:

Present: Ms. Joyce Hagen Schifano, Chair, Presiding
Mr. William P. Mulloy, Sr., Vice Chair
Mr. Ulysses L. Bridgeman, Jr.
Mr. Kevin D. Cogan
Dr. Richard C. Feldhoff
Mr. Owsley B. Frazier
Mr. Nathaniel E. Green
Trustees Present: Mr. Carlton J. Brown
Ms. Linda Wallbaum Cauble
Mr. Grant M. Helman
Mr. Milton M. Livingston
Ms. Jessica S. Loving
Mr. Darryl T. Owens
Mr. J. Chester Porter
Ms. Annette Schnatter
Ms. Melissa Long Shuter
Ms. Sandra Metts Snowden
Ms. Elizabeth H. Worland
Trustees Absent: Ms. Marie Abrams
Ms. Mary Yarmuth
From the University:
Dr. John W. Shumaker, President
Dr. Carol Z. Garrison, Provost
Mr. Joseph S. Beyel, Vice President for Development and     Alumni
Dr. Denise D. Gifford, Vice President for Student Affairs
Mr. Daniel Hall, Vice President for University Relations
Dr. Joel A. Kaplan, Vice President for Health Affairs
Dr. Ronald L. Moore, Vice President for Information &     Technology
Mr. Larry L. Owsley, Vice President for Finance &     Administration
Dr. Nancy Martin, Vice President for Research
Dr. Gene Gilchrist, Vice President for Special Ventures
Ms. Angela Koshewa, University Counsel
Dr. David Howarth, Associate University Provost
Mr. Dave Barker, Director, Audit Services
Ms. Terri Rutledge, Assistant Vice President for Administration
Ms. Trisha Wolf, Board Liaison, President's Office
Ms. Debbie Dougherty, Board Liaison, President's Office
Ms. Rae Goldsmith, Associate V. P. for Marketing &     Communications
Mr. John Drees, Director of Public Information
Ms. Kathleen M. Smith, Assistant Secretary, Board of Trustees
Also Attending: Mr. Bernie Backert, Deloitte & Touche
Ms. Mary McKinley, Deloitte & Touche

I. CALL TO ORDER

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

  • Minutes for July 23, 2001

Dr. Feldhoff made a motion to approve the minutes of the previous meeting held July 23, 2001. The motion was seconded and passed.

II. ACTION ITEM: APPROVAL OF HOUCHENS BUILDING HVAC SYSTEM RENOVATION

Mr. Owsley reported that the HVAC system in the Houchens building dated to the mid-70's. The Houchens building has experienced several major maintenance conditions and the University needs to upgrade the system. The project will install a more efficient HVAC system, which will result in reduced maintenance and utility costs. Mr. Mulloy made a motion, which Dr. Feldhoff seconded, to approve the

President's recommendation that the Board of Trustees authorize the following project:

Project Estimate cost Fund Source
Houchens Building, HVAC upgrade $131,425 Plant Funds

The motion passed.

III. ACTION ITEM: APPROVAL OF RESEARCH HANDBOOK

With the increase in research generated by the Challenge for Excellence, Dr. Martin reported that the University has taken efforts to ensure compliance with federal and state regulations and guidelines. The publication and continual review of the proposed Handbook insure the researchers and administrators have clear guidance on appropriate research conduct. In conjunction with the publication of the handbook, a comprehensive training schedule is being developed. Dr. Martin plans to invite all researchers and administrators to attend the sessions on the Research Handbook. Mr. Mulloy made a motion, seconded by Mr. Bridgeman, to approve the

President's recommendation that the Finance Committee of the Trustees approve the "Research Handbook" (see attachment), and that the President, Provost, Vice President for Research and the Vice President for Finance and Administration be authorized to carry out the policies and procedures contained in the Research Handbook, and that the President, Provost, Vice President for Research, and the Vice President for Finance and Administration be charged with the responsibility of updating the Research Handbook as guidelines and policies change, and that these officers report back to the Board on an annual basis any substantial changes that may occur.

The motion passed.

IV. ACTION ITEM: YEAR END FINANCIAL REPORT

Mr. Owsley highlighted information from the Consolidated Financial Statements for the year ending June 30, 2001: (see attached)

Ms. Snowden inquired whether the $300,000 difference in Athletics results from the one-time payments the University and the Foundation made. Mr. Owsley informed the committee that there were some dual expenses in basketball that were not projected in the original budget. Dr. Gilchrist added that the budget did not include encumbrances from the prior fiscal year, which did increase expenses. Ms. Snowden questioned if the loss from the stadium was included. Mr. Owsley reported that the losses are not from the stadium but the Brown & Williamson Club. He added that football and stadium revenues exceed expenditures. Ms. Schifano inquired whether the cost of maintaining the club affects the budget. Dr. Gilchrist reported that while the rental fees for the Brown & Williamson Club do not recover the cost expended for the club, in its totality stadium and football revenue covers expenditures. Dr. Shumaker stated that even though the stadium and the football program are in balance there is a cash flow issue in athletics that is difficult, and not necessarily related to the stadium.

Mr. Owsley introduced Bernie Backert and Mary McKinley, from Deloitte & Touche, who highlighted information from the report:

  1. The financial statements were presented in accordance with generally accepted accounting principles and the opinion of the auditors is "clean" and unqualified.
  2. Deloitte & Touche has issued a report dated September 28, 2001, on its consideration of UofL's internal control over financial reporting and its tests of compliance with certain provisions of laws, regulations, contracts, and grants.
  3. Deloitte & Touche has issued a report on the University's compliance with House Bill 622
  4. The items of non-compliance found last year have been corrected
  5. There were no changes in accounting policies from this year as compared to the past year.
  6. It is expected that the adoption of GASB Statement No. 35 will have a material effect on the University's consolidated financial statements. Among other things, net assets (currently referred to as fund balances) will be reduced due to the requirement of this Statement to recognize depreciation of all capital assets. Additionally, the content and presentation of the basic consolidated financial statements will be significantly revised under this Statement, including the addition of management's discussion and analysis as required supplementary information.

Mr. Backert reported that Deloitte & Touche worked with the university to identify minority students to join their internship program. Delila Ivery, UofL accounting major, worked very well during the summer as an intern.

Mr. Green made a motion, seconded by Mr. Bridgeman, to approve the

President's recommendation that the Finance Committee accept the audit report for the Year ended June 30, 2001 as prepared by Deloitte & Touche .

The motion passed.

V. OTHER BUSINESS

Ms. Cauble questioned whether the University has discussed with investment advisors the reallocation of any invested assets due to today's difficult economic situation. Mr. Owsley reported that the investment advisor advised the Foundation that the asset allocation did not need to be adjusted.

VI. ADJOURNMENT

Dr. Feldhoff made a motion, seconded by Mr. Cogan, that the Committee adjourn the meeting at 2:15 p.m. The motion passed.

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