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Finance Committee Minutes -- March 13, 2003 -- Board of Trustees -- University of Louisville

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MINUTES OF THE FINANCE COMMITTEE
UNIVERSITY OF LOUISVILLE BOARD OF TRUSTEES

March 13, 2003

The Finance Committee of the University of Louisville Board of Trustees met on Thursday, March 13, 2003, in the Jefferson Room of Grawemeyer Hall with members present and absent as follows:

Finance Committee Present:
Ms. Joyce Hagen, Vice Chair, Presiding
Mr. Ulysses L. Bridgeman, Jr.
Mr. Kevin Cogan
Prof. David Ensign
Mr. Nathaniel E. Green
Mr. Owsley B. Frazier
Finance Committee Absent:

Mr. J. Chester Porter, Chair

Other Trustees Attending:
Ms. Marie K. Abrams
Ms. Virginia C. Brown
Ms. Linda Wallbaum Cauble
Ms. Donna Tinsley Denny
Mr. Grant M. Helman
Mr. Milton M. Livingston
Mr. Christopher J. Marlin
Ms. Sandra Metts Snowden
Ms. Elizabeth Worland
From the University:
Dr. James Ramsey, President
Dr. Shirley Willihnganz, Acting Provost
Dr. Joel A. Kaplan, Vice President for Health Affairs
Dr. Nancy C. Martin, Vice President for Research
Mr. Larry L. Owsley, Vice President for Finance & Administration
Dr. Ron Moore, Vice President for Information Technology
Mr. Joseph S. Beyel, Vice President for Development & Alumni
Dr. Gene Gilchrist, Vice President for New Ventures
Mr. Mike Curtin, Director, Office of Planning & Budget
Dr. David Howarth, Associate Provost
Dr. Dale Billingsley, Associate Provost
Mr. Mitchell Payne, Assoc. Vice President, Finance & Administration
Ms. Carolyn Cochran, Assistant to the Provost
Mr. Alvin Herring, Exec. Director, Counseling Center
Ms. Rae Goldsmith, Associate V. P. for University Relations
Mr. Sonny Altman, Director, Contract Admin.and Risk Management
Mr. John Drees, Communications and Marketing
Ms. Shannon Staten, Director, Residence Administration
Mrs. Kathleen M. Smith, Assistant Secretary, Board of Trustees
Ms. Debbie Dougherty, Board Liaison, President's Office

I. Call to Order

Having determined a quorum present, Vice Chair Hagen called the meeting to order at 1:30 p.m.

  • Approval of Minutes, January 9, 2003

Mr. Green made a motion, which Mr. Bridgeman seconded, to approve the minutes of January 9, 2003. The motion passed unanimously.

II. Action Item: Approval of Supplemental 403(b) Retirement Plan

Vice President Owsley reported that the university established a supplemental retirement plan consistent with the requirements of section 403(b) of the Internal Revenue Code in 1990. The supplemental retirement plan permits employees to personally provide for their retirement security in amounts exceeding those provided by the basic retirement plan. Under the provisions of the Internal Revenue Code, he noted there were tax advantages to employees.

At its meeting on February 13, 2003, the Board approved a program whereby, for a limited period of time, eligible faculty could pursue a phased retirement option. As a part of this pilot program, Vice President Owsley stated that faculty would retire from the university, and then rejoin on a part-time basis for a specific period of time. This plan enables interested faculty to receive retirement benefits, even though they may continue to work part-time. This also clarifies that supplemental pay is compensation for purposes of the supplemental retirement plan. Prof. Ensign made a motion, which Mr. Green seconded, to approve the

President's recommendation that the Board of Trustees make the following amendments to the University's 403(b) Supplemental Retirement Plan (relating to definitions and benefits), effective April 1, 2003:

1). In section 2.8 add a new second sentence to read:
"Compensation includes supplemental pay as defined by university policy."

Also in section 2.8 add the phrase "('X-Pay') as defined by university policy" immediately after "additional pay" and immediately before "and any other pension benefit plan" in the sentence immediately following the sentence added by this resolution.

2). In section 2.13 add "or participating in an early retirement/phased retirement program," immediately following "university" and immediately preceding "provided."

3). In Section 5.1 add the following new sentence at the end thereof:
"For the purposes of this section 5.1, this will include participation in an early retirement/phased retirement program."

4). In Section 5.2, add the phrase "early retirement/phased retirement," between "retirement," and "death," in the first sentence, and change the period following "employment" to a comma at the end of the second sentence and add the phrase "subject to the distribution rules."

The motion passed unanimously.

III. Action Item: Approval of Changes to 403(b) Retirement Plan

Vice President Owsley reported the university established a retirement plan consistent with the requirements of section 403(b) of the Internal Revenue Code in 1990. He noted the purpose was to permit employees to provide for their retirement security while taking advantage of tax savings available under the provisions of the Internal Revenue Code. In order to fulfill its potential as a retirement plan, benefits, as defined in the retirement plan, were only payable subsequent to separation of service.

The amendment to Section 2.8 changes terminology to make it consistent with the supplemental retirement plan, and clarifies that supplemental pay, as defined by university policy, is included as compensation for purposes of the retirement plan. Prof. Ensign made a motion, which Mr. Cogan seconded, to approve the

President's recommendation that the Board of Trustees make the following amendments to the university's 403(b) retirement plan (relating to definitions, eligibility for participation, university contributions, and benefits), effective April 1, 2003:

1). In section 2.8 add a new second sentence to read:
"Compensation includes supplemental pay as defined by university policy."

In addition, in the sentence immediately following this new sentence, delete the word "'x-pay'" and substitute in lieu thereof "additional pay ('x-pay')" and add the phrase "as defined by university policy" immediately after "additional pay ('x-pay')" and immediately before "and any other employee pension benefit plans..."

2). In section 2.15 excise the phrase "nor shall it include any person included in a classification of persons who are" between "plan" and "other," change the comma following "plan" to a period, and add the following as the beginning of a new sentence following "plan.":
"With the exception of any person employed by the university and authorized to participate in this plan as a result of an early retirement/phased retirement program, the term "employee" shall not include any person..."

3). In section 3.1 add the following new sentence at the end thereof: "For the purposes of this section, persons participating in an approved early retirement/phased retirement program will be eligible to become a participant upon rehire."

4). In Section 4.2 add the following new sentence at the end thereof: "Contributions to the plan will be made even if the employee is participating and receiving benefits under an early retirement/phased retirement program."

5). In Section 6.1 add the following new sentence at the end thereof: "For the purposes of this section 6.1, this will include participation in an early retirement/phased retirement program."


6). In Section 6.2, add the phrase "early retirement/phased retirement," between "retirement," and "death," in the first sentence, and change the period following "employment" to a comma at the end of the second sentence and add the phrase "subject to the distribution rules."

The motion passed unanimously.

IV. Action Item: Approval of Petty Cash Authorization

Vice President Owsley reported that current state law vests with the Board of Trustees all authority over university assets. Existing university policy requires the Controller's Office to approve all bank accounts. Mr. Owsley said that under a recently completed internal audit of the University assets and liabilities, Audit Services recommended the implementation of a blanket authorization whereby the Controller's Office, following established criteria, could approve the opening of petty cash bank accounts in the name of the University. In response to Prof. Ensign's question regarding the use of petty cash accounts, Mr. Owsley acknowledged that the use of procurement cards has decreased the need for petty cash accounts. Prof. Ensign made a motion, which Mr. Bridgeman seconded, to approve the

President's recommendation that the Board of Trustees grant authority to the Controller's Office to open petty cash accounts at local banks based upon the requesting department adhering to existing university policy.

The motion passed unanimously.

V. Action Item: Approval of Housing Fees for 2003-04

Mr. Herring reported that in order to maintain the current level of service and to offset costs associated with computer line and maintenance expenses, housekeeping, cable and utility costs, as well as the elimination of the state subsidy, the housing increase is recommended.

He noted the Director of Housing and Residence Administration consulted with the Presidents of the Student Government Association and the Resident Student Association, as well as the Resident Advisory Council before making this recommendation. Mr. Herring acknowledged the student leaders' recognition of the need for the proposed housing increase in light of rising costs and discontinuation of the state subsidy; however, he recounted their concern about the increase along with tuition and other fee changes. Mr. Green made a motion, which Prof. Ensign seconded, to approve the

President's recommendation that the rates below for the University of Louisville housing units be approved effective July 1, 2003.

HOUSING RATES
2003-2004

Traditional Halls : Semester Rates.

Miller, Threlkeld, Unitas, Center, Stevenson, West, Wellness, Greek

Double $1,386
Single $1,800

Louisville Hall
Double $1,668
Double with bath $1,800
Single $2,010
3 bedroom suite $1,500
2 bedroom suite $1,710

Apartments : (University Tower Apartments and Medical-Dental Apartments) Monthly rates.

2 bedroom $700
1 bedroom $595
Efficiency $544

Medical-Dental residence hall Semester rate

Single $1,800

The motion passed unanimously.

VI. Action Item: Approval of Food Service Meal Plan

Vice President Owlsey reported that for the past several months, university staff have worked with students and the food service contractor, Chartwells, to develop a plan to improve campus food services. Mr. Owsley recognized the active involvement in this review process by the Food Service Advisory Committee, the Resident Student Association and many other student gorups. He further noted the Faculty and Staff Senates, Student Residence Hall Association and the Food Service Advisory Committee have endorsed this proposal. He noted the university's contract with Chartwells will be adjusted to include the following:

  • new food service brands

  • expanded hours of operation

  • new products

  • new food service locations, and

  • extensive renovation work totaling $900,000

Mr. Owlsey briefed the Board about his survey of benchmark institutions and the other state institutions in Kentucky and noted the proposed meal plan pricing structure was within the norm of those operations. In response to Ms. Snowden's question concerning the requirement for all resident students to purchase the meal plan, Vice President Owsley noted that during the first year, all first-year resident students are required to purchase the meal. In 2004, all residents on campus, except those in apartments, will be required to purchase the meal plan. In response to Ms. Abrams' concern regarding the potential financial hardship for residential students, Mr. Owsley pointed out that UofL is at the bottom of the cost list compared to other institutions. He stated the cost of the meal plan is equivalent to one meal per day for five days a week. Mr. Owsley indicated a meal plan has been in effect for first year students for the last couple of years. He stated this meal plan does not appear to pose an undue burden on the students. He further noted the positive student feedback about the meal plan. He believed that Financial Aid has made adjustments for Fall and will make other adjustments as the bigger increase goes into effect. Mr. Marlin reported that at the recent Student Government Association meeting, students complimented Messrs. Owsley and Payne on the improvements made to the food service. Mr. Marlin stated that the Resident Student Association overwhelmingly passed the recommendation for the increase because the students supported the needed upgrades.

Vice President Owsley reported that two very popular fast food service options will be available in the food court this Fall and they will accept the meal card. Prior to this Fall, current fast food vendors, Subway and Uncle Chen's, did not accept the meal card. Those vendors were replaced with Wendy's and Subway where students can charge their purchases against their meal plan. He noted the overwhelming support for this proposal. Vice President Owsley reported that in the preference surveys, students requested more options, which the University was trying to accommodate. Ms. Cauble inquired regarding the volume of the customers in the cafeteria, and Mr. Owsley noted there is pretty good traffic from students who are not meal plan participants. He commented that there are many students who do not live in the residence halls but have meal cards because under Kentucky law they are not required to pay sales tax on those purchases. Prof. Ensign inquired regarding the use of the smart cards for meal purchases and Mr. Owsley replied that people may use their smart cards now to purchase meals. Vice Chair Hagen acknowledged the cooperative, extensive dialogue in working out the meal plan solutions and commended Vice President Owlsey and his staff for their work on this project. Mr. Owsley recognized the excellent work of Mr. Mitchell Payne and Mr. Sonny Altman. Mr. Cogan made a motion, which Mr. Green seconded, to approve the

President's recommendation that the following food service meal plan be adopted:

  • effective Fall 2003, increase the student meal plan from $700 to $770 per semester for all first year residents;
  • effective Fall 2004, increase the meal plan to $850 per semester for all first year residents; and
  • effective Fall 2004, require a $425 per semester meal plan for all other resident students, except those residing in campus apartments.

The motion passed unanimously.

VII. Action Item: Approval to Begin Planning Stages of the Bio-Medical Research Building, Phase III

Vice President Owsley reported the State's Executive Spending Plan for FY03 authorizes the university to begin the planning process for a third biomedical research building at the Health Sciences Center. This allows the university's readiness to proceed to construction if project authorization is granted by the 2004 General Assembly. The estimated cost through design development is approximately $2,300,000 and the total project estimate is $98 million. Vice President Martin acknowledged the duration of time required from initial planning stages until the facility is ready for occupancy can be quite lengthy, therefore, this authorization allows the University to maintain its momentum. Mr. Green made a motion, which Mr. Frazier seconded, to approve the

President's recommendation that the Vice President for Finance and Administration be authorized to execute contracts for programming, schematic design and design development of a third research building at the Health Sciences Center: Biomedical Research Building Phase III.

The motion passed unanimously.

VIII. Information Item: Interim Financial Statements as of December 31, 2002

Vice President Owsley reviewed the interim financial statements as of December 31, 2002, and noted the University is in good financial shape. He reported the University's closing on two bond issues and acknowledged Moody's upgraded bond rating to A3, which he noted as an indication of the financial stability of this organization.

IX. Executive Session

Pursuant to KRS 61.810(1)(f), Prof. Ensign made a motion, which Mr. Frazier seconded, to close the session to discuss a real estate matter. The motion passed unanimously.

X. Open Meeting Reconvenes

Vice Chair Hagen reconvened the open session of the Finance Committee. She reported that President Ramsey and Vice President Owsley discussed a real estate matter and no action was required.

XI. Other Business

Vice President Kaplan updated the Committee on the status of the oncology partnership for the cancer hospital.

XII. Adjournment

Prof. Ensign made a motion, which Mr. Green seconded, to adjourn the meeting at 1:55 p.m. The motion passed unanimously.

 

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