MINUTES OF THE FINANCE COMMITTEE
UNIVERSITY OF LOUISVILLE BOARD OF TRUSTEES

May 20, 2002

The Finance Committee of the University of Louisville Board of Trustees met in the Jefferson Room of Grawemeyer Hall, with members present and absent as follows:

I. I. Call to Order

Having determined a quorum present, Chair Schifano called the meeting to order at 1:45 p.m.

• Approval of Minutes, April 19, 2002

Mr. Frazier made a motion, which Dr. Feldhoff seconded, to approve the minutes of the April 19, 2002 meeting. The motion passed.

II. Action Item: Approval of New Bank Account

Mr. Owsley reported that UofL has entered into a contract with AFSA Data Corporation located in Lombard, Illinois to administer its student loan portfolio. The contract requires the University to maintain a depository account with Firstar Bank Milwaukee, Wisconsin, which provides all lockbox services for AFSA. The account will serve as the sole repository for collections of student loans. Loan collection will be transferred to the University’s central account with Republic Bank on a regular basis. Dr. Feldhoff made a motion, Mr. Frazier seconded to approve

The President’s recommendation that the Finance & Executive Committee of the Board of Trustees adopt the attached resolution opening a new bank account at Firstar Bank Milwaukee, Wisconsin titled, University of Louisville Student Loan Depository Account.

The motion passed with one opposition.

III. Action Item: Approval of Capital Construction Project

• Renovation of Pediatric Clinical Facility

Mr. Owsley reported that this project is the renovation of the pediatric dentistry clinic. The clinic will focus on providing services to the disadvantaged in the community.
Dr. Feldhoff made a motion, seconded by Mr. Frazier, to approve

The President’s recommendation to approve the following project:

Project Estimated Cost Fund Source
1. Renovation of Pediatric Dentistry $200,000 Private Gifts & Clinical Facility Clinical Reviews

The motion passed.

IV. Action Item: Approval of Ground Lease to ULH, Inc. for Phase II Housing

Mr. Owsley reported that in the January 25 meeting the committee received an updated report on university housing to be open by August 2003. It will be a three-story brick addition with approximately 400 beds. The proposal is to enter into a long-term lease with ULH, Inc. ULH, Inc. will work on the development arrangements and the financing needed for the actual construction. Mr. Frazier made a motion, which Mr. Bridgeman seconded, to approve

The President’s recommendation to approve the ground lease in the form of the Phase I model and authorize the President to approve exhibits on the Phase II lease as they become available and to take all necessary actions to execute the lease.

The motion passed.

V. Action Item: Approval of Housing Fees for 2002-03

Dr. Gifford reported that this is the annual proposal for housing fees that the Board considers every spring. The housing operation is in a four-year transition from a budget that has some general funds to a full auxiliary. These new rates reflect a very careful process of looking conservatively at what needs to be done in terms of renovations and continued services to students. The new rates reflect an increase between 3% and 12% depending on the unit. The Resident Student Association and the Student Government Association have reviewed the proposal. Dr. Feldhoff questioned the rationale for a 12% increase and the comparison to other Universities in the area. Dr. Gifford informed the committee that the 12% increase is in facilities that need substantial renovations including a new boiler and roof. She assured the committee that UofL is in line with UK’s rates.

Dr. Gifford also reported that students have completed surveys to help prioritize the renovation list. Dr. Garrison pointed out that this is the first year that housing has functioned as a full auxiliary. This rate adjustment process will produce reserves at the end of every year for routine maintenance. Mr. Marlin inquired about the funds that will be withheld from the budget and where it will be held. Dr. Gifford stated that the money will be retained as auxiliary funds with the caveat that the University will need to find a way for earned interest to be channeled back to housing. In response to a question from Mr. Marlin, Dr. Gifford reported that Betty Johnson hall includes parking in its rent. At the end of the year if the collected funds exceed operational costs at Betty Johnson Hall, the parking is taken out of it and the additional monies are given back to housing operation to be used on the renovation of other residence halls. Mr. Green made a motion, which Mr. Bridgeman seconded, to approve

The Presidents recommendation that the following rates for the University of Louisville housing unites be approved effective July 1, 2002:

HOUSING RATES
2002-2003

Miller, Threlkeld, Unitas, Center, Stevenson, West, Wellness, Greek	Double$1,236 per semester Single $1,860 per semester
Louisville Hall	Double $1,428 per semester Double w/bath $1,596 per semester Single $1,638 per semester 3 Bedroom Suite $1,284 per semester 2 Bedroom Suite $1,470 per semester
University Tower Apartments, Medical/Dental Apartments	2 Bedroom $685 per month 1 Bedroom $573 per month Efficiency $498 per month
Medical/Dental Residence Hall	Single $1860 per semester

The motion passed.

VI. Budget Workshop

• Operating Budget

Dr. Garrison reported that the budget this year includes a 2% continuing allocation decrease. When compared to other universities UofL is doing much better.
Mr. Curtin reminded the committee that the budget he discussed is the General Fund
Budget and does not include the UofL Foundation or the ULAA Budget. Mr. Curtin pointed out that there is still a month for changes and other recommendations. He also stated that the budget under Dr. Shumaker and Dr. Garrison followed an exhaustive consultation process where he worked closely with the Deans and Vice Presidents as well as the faculty and staff senates to come up with a budget strategy. Mr. Curtin advised that pursuant to Kentucky Revised Statutes, UofL is required to operate within a balanced budget. He commended Dr. Shumaker for making sure the budget decisions mirrored the Strategic Plan for the institution. Mr. Curtin identified the major forces affecting the budget as follows:

• 2% State Budget Reduction-
• Challenge for Excellence –Phase III
• Greater Reliance on Tuition Revenue
• Unusual Salary Increase Proposal-[Because there was not adequate funding in the budget for permanent salary increases, employees could receive a one time bonus].

Mr. Curtin reported that the budget started out with a base of $316,442,900 with a proposed increase of $6,360,400. The proposed 2002-2003 general fund operating budget is $322,803,300, which is an overall 2%, increase.

• ULAA

Dr. Gilchrist briefed the Board on the proposed budget for the ULAA. He stated the budget was in structural balance. Football and Basketball exceed original projections. Papa John’s Cardinal Stadium is under projection but much of this is due to cancelled events because of September 11. Mr. Gilchrist reported that the target for the marketing department was increased from $800,000 to $1.2 million and they achieved the goal. He stated that on the revenue side projections show a shortfall of approximately $1.9 million, which is down from the $5 million adjustment that occurred on the books at the end of last year.

Dr. Gilchrist reviewed three possible scenarios that would help bring the budget in total balance over the next four years. Dr. Garrison noted that the three scenarios show the University, Foundation, and ULAA are working together to assure the burden of the budget is not placed solely on the students. Dr. Gilchrist stated that gender equity will not be compromised.

VII. Adjournment

Mr. Green made a motion, which Mr. Frazier seconded, to adjourn the meeting at 3:04 p.m. The motion passed.