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Board of Regents meeting summary, June 2010

The Board of Regents met to act on the proposed 2011 recommended operating budget, and more

By Adam Overland

Board of Regents June 2010 165x165

June 22, 2010

Presidential search advisory committee
The Board of Regents appointed a presidential search advisory committee during its June 10-11 meeting, as the University of Minnesota begins the search for its 16th president. Robert Bruininks concludes his ninth and last year as president of the University with the end of his contract in June 2011.

Regent Patricia Simmons will chair the search advisory committee, which consists of 12 members representing students, faculty, staff, alumni, and members of the community.

The board discussed a charge for the search advisory committee as well as the characteristics they will be seeking in the new president.

Although there was some discussion as to whether the composition of the committee adequately represents the state, the board ultimately approved the selection by a vote of 11 to 1.

Regent Larson voiced concern that Minnesota's business community is not thoroughly represented on the committee. Regent Simmons responded that additional input was being sought through interviews with leaders in the Minnesota business community. "To date, we've completed interviews with nine major CEOs, there are three scheduled, and five in the pipeline," Simmons said.

Regent Johnson expressed concern with the high number of committee members from within the University. "I want to be respectful of this list—6 of 12 are professors of the U system. They are all well-qualified people, bright people who no doubt want what's best for this University. But human nature is such that if we want to do business differently—to change and have vision—that vision often comes from the outside," said Johnson.

Regent Simmons again responded, commenting not only that faculty must believe in the process in order to believe in the selection, but that professors bring critical insight to the task. "We very much need the ability to do due diligence on candidates, and the professors are better positioned than anyone to do that," Simmons said.

Chair Allen noted that it was important not to lose sight of the fact that the committee is an advisory committee, and will not select the next president of the University, but only advance semi-finalists. "When we look at the background of the advisory committee, we don't want to do so in the absence of this board—put the two of them together, and there is a lot of diversity and a lot of experience," said Allen.

The full list of members of the committee, as well as more information about the process, can be found at presidential search.

Effects of Health Reform on UPlan
During the June 10 meeting of the faculty, staff, and student affairs committee, the board was presented with the annual UPlan report, which included an assessment of the impact that federal and state health care reform legislation may have on the plan.

Law professor Fred Morrison told the board that many of the key operating principles of the UPlan are sound (including encouraging prevention and wellness programs—a key element of federal legislation—and not penalizing people for preexisting conditions) and may not be heavily impacted by the legislation, but that uncertainties and challenges remain.

Potential issues for the University will be the limits placed on the employee's share of the plan cost and on the overall cost of the plan, both of which could trigger penalties for the University and added cost for plan members.

"We'll need to keep employee share of the premium costs below thresholds, at least for lower-income individuals, so you don't trigger either the penalty or voucher, because both of those would be detrimental to the plan. Out-of-pocket costs for employees will need to be kept below the applicable limit," said Morrison.

While some preliminary rules of health reform will take effect from 2010-13, the federal plan begins to operate more fully in 2014, and in 2018 a "Cadillac tax" will take effect.

Beginning in 2014, for example, an employee who pays more than 9.5 percent of salary for employer-sponsored coverage will be entitled to switch to the new federal Health Insurance Exchange plans (to open in each state in 2014). The U would in that case pay a $3,000 federal "fee" for each employee. If the employee's share of the cost of employer-sponsored care exceeds 8 percent of the employee's total household income and that income is less than 400 percent of federal poverty level standards ($42,520/individual; $88,000/family), a voucher would be issued by the U in the amount of about $5,519 for an individual or $11,177 for a family, which the employee could then take to the exchange.

The Cadillac tax will be imposed if the employer contribution to the medical plan plus the employee share of the cost and any Flexible Savings Account money exceeds $10,200 (individual), or $27,500 (family). The tax will be 40 percent of the excess amount.

Commissioner of Human Services and chair of the governor's health cabinet Cal Ludeman also testified before the board. "You should be confident that the UPlan is a sophisticated, smart plan for U employees. But much like the state employee plan, it is on the Cadillac side—almost by any definition—because it is good," said Ludeman.

One way to avoid the Cadillac tax may be for the U to more aggressively promote wellness and to provide wellness rewards for actually achieving goals, not just for participation.

President's report
During his report to the board, President Bruininks provided the board with an update on the status of the Central Corridor Light Rail (CCLRT) project. Bruininks said that the April 21 agreement between the U and the Met Council provided a framework for critical issues necessary to protect the U's research, and that as a part of that process, the board approved a temporary easement for advanced traffic improvements on the U campus. While construction of the advance traffic improvements for CCLRT began in May, the work is only the first step in a four-year project.

Bruininks noted that since the April 21 agreement, the U's mediation team has been working to complete a comprehensive agreement, and he addressed the misconception that everything was decided in the April 21 agreement. "Although I think we've made considerable progress, there are still major issues that must be resolved. Mediation continues, and these sessions could produce an agreement by July, but I want to emphasize there are still very serious issues with long-term impact to the U’s research along Washington Avenue," Bruininks said.

For ongoing construction information, see the U's Central Corridor construction website and sign up for regular email updates.

President's recommended FY 2011 operating budget
The president presented the recommended operating budget for fiscal year 2010-11 during the June 11 board meeting. The total budget challenge for the coming year is $152 million. The president's plan balances the budget with $47.1 million in new tuition revenue and another $104.9 million in unit reductions and resource adjustments. It's the second year in a row that the University of Minnesota faces a significant budget challenge due to the reduction in state funding, which now represents just 18 percent of the U’s budget.

The budget resolution includes details related to employee compensation, which finalize the plan for reductions in faculty pay and authorizes the president to implement the same level of pay reduction for non-tenured faculty and academic staff. Under the plan, civil service and bargaining unit employees will take three days of unpaid furlough—equivalent to the 1.15 percent temporary salary reduction that faculty and P&A employees will take. Senior administrators' pay will be cut 2.3 percent. Employees have also been given the opportunity to take additional voluntary days. Money saved through voluntary furloughs will be directed back to the local unit to cover costs, the president said.

Provost Sullivan reported that the budget has involved cuts shared systemwide, including, for example, 11 fewer positions and 19 fewer course offerings in the College of Education and Human Development, 52 fewer positions and 145 fewer course offerings in the College of Liberal Arts (in 2010, the number of grad students in CLA was down 18 percent), and, over the last two years, a $36 million cut from central administration budgets. Senior vice president Robert Jones also reported 51 fewer faculty and staff positions in Extension, as well as a reduction in the number of state offices.

Senior vice president and dean of the Medical School Frank Cerra detailed reductions within the Academic Health Center (AHC), including a seven percent decrease in AHC administrative infrastructure, the closure of the geriatric dentistry program, layoffs including 40-45 staff members in the School of Dentistry and another 40-45 staff in the School of Veterinary Medicine, and the elimination of 2,000 adjunct faculty positions costing about $3,000 each from around the state, as well as vacated faculty positions. "When we've received vacated faculty positions, we strategically reassign them—you can guess that most of those are going into the research programs represented in the Biomedical Discovery District," said Cerra.

A public forum on the U's recommended FY 2011 operating budget was held June 14, during which the board heard about an equal number of comments from faculty and staff across the U, both in support of and critical of the budget proposal. The budget was ultimately approved by the board during the June 22 session. President Bruininks posted a message regarding the budget to his blog on June 22. For more information, see a PDF of the 2010-11 recommended operating budget.

Appointment of Regents Professors
The board appointed three new Regents Professors, the highest academic honor at the U. "These are very distinguished people, selected from about 40 to 50 applicants who were reviewed very intensively," said Bruininks.

The new Regents Professors include William Iacono, Distinguished McKnight University Professor, professor of psychology, psychiatry, neuroscience and law, and adjunct professor of child development, College of Liberal Arts; Horace Loh, Frederick and Alice Start Professor and head of the department of pharmacology, Medical School; and Karen Seashore, Robert H. Beck Professor of Ideas in Education, professor in the department of organizational leadership, policy and development in the College of Education and Human Development.

The number of Regents Professors at the University now number 30, with a goal set some years ago by the president and provost to increase that number to one percent of faculty across the system. For more information, see Regents Professors.

Approval of schematic design for Cancer/Cardiovascular Complex
The Board of Regents' Facilities Committee approved the schematic design plan for the Cancer/Cardiovascular Complex. The original plan has been slimmed down by consolidating functions and repurposing space to lower the price tag without compromising the vision.

The building will be the gateway to the Biomedical Discovery District, with construction beginning in April 2011, and faculty and staff moving in 2013. It will house 63 principal investigators (new and existing).

The district will also create approximately 5,000 construction jobs for Minnesotans in the short term, and will attract an estimated $35-40 million annually in new research dollars, creating long-term jobs for Minnesotans in the biomedical industry. Every $1 million of federally sponsored research generates more than $2 million in new state business activity in the state.