WASHBURN UNIVERSITY OF TOPEKA BOARD OF REGENTS A G E N D A ___________________________________________________________________________ DATE: Wednesday, May 13, 1998 PRE-MEETING DINNER: - 5:30 p.m. Lincoln Room BUSINESS MEETING: - 6:15 p.m. Kansas Room ___________________________________________________________________________ I. Call to Order Chairperson Parks II. Roll Call Mr. Craig Mrs. Porter Mr. Dick Mr. Roth Mr. Engel Mrs. Wagnon Mr. Ferrell Dr. Ybarra Mrs. Parks III. Approval of Minutes of April 15, 1998 meeting as circulated. IV. President's Report V. New Business A. Action Items: 1. FY 99 Budget 2. FY 00 Preliminary Budget Request 3. Washburn University Retirement Program 4. KSDOE Equipment Grant Proposal B. Consent Agenda: 1. Faculty Personnel 2. Voluntary Phased Retirement 3. Expenditures Over $25,000 a. Corridor Floor Tile Replacement - Stoffer Hall 4. Liquidated Claims Approval - April 1998 5. Public Fund Investments C. Information Items: 1. Campus Residential Life 2. Admission Standards -DISCUSSION ONLY- D. Executive Session Agenda Item No. V. A. 1. Washburn University Board of Regents SUBJECT: FY99 Budget DESCRIPTION: I. OPERATING BUDGET At the February 18, 1998 meeting, the Board approved the budget guidelines to be used by the Administration to develop the FY99 operating budget. The Board approved the following expenditure increase guidelines: 3.5% Salary/Wage Increase (merit based) $735,000 2.5% Other Operating Expense (OOE) Increase 137,500 Funding of Prior Commitments 246,375 Increased Employee Benefits 415,000 These expenditure increases were to be funded by: Increase in State-Aid $479,469 3% Increase in Tuition 330,549 Increase in Local Tax Revenue 200,000 Other Revenues 108,857 Increased Employee Benefit Fund Reimbursement 415,000 Following these guidelines and estimated revenue increases, the Administration has developed the FY99 operating budget as summarized on Exhibit 1. Highlights of the proposed FY99 operating budget include: Total E&G revenues of $41.6 million, a $1.9 million increase over the FY98 budget. This increase from the FY98 budget resulted primarily from a 3% increase in tuition rates (5.7% - 6.2% for Law School), an approximate 6% increase in the State-aid grant, an increase in local tax and employee benefit fund revenue due to an increase in assessed property valuation, and other increases based upon projected levels of activity in various units. $300,000 planned distribution from reserves to fund the marketing plan. Total E&G expenditures of $41.8 million of which $300,000 is to be funded from reserves. This increase of $2.5 million from the FY98 budget is allocated primarily for 1) adjustments to base to fund prior FY98 commitments, 2) salary increase pool of 3.5%, 3) OOE increase of 2.5%, 4) increase in employee benefit cost, 5) Marketing plan, 6) self funded increases for the Law School, KTWU, and Continuing Education, 7) Athletic Department development staff, and 8) special programs that meet priorities established by the President. In addition, $75,000 is being held centrally for allocation to departmental budget priorities once revenue estimates are realized. The FY99 proposed budget includes the internal reallocation of almost $250,000 to meet the priority needs of the units. Exhibit 1A details these reallocations. CAPITAL IMPROVEMENTS, MAJOR MAINTENANCE AND REMODELING BUDGET The Administration and Budget Committee have projected that over $2.5 million will be available from the Debt Retirement and Construction Fund for FY98. It is recommended that this fund be allocated as follows: Debt Service $ 774,500 Electronic Technology Committee 400,000 Capital Improvement, Maintenance, etc 1,304,650 Miscellaneous/Unallocated 69,653 Exhibit 6 illustrates the details of the revenue projections for the Debt Retirement and Construction Fund and lists the recommended projects. It is important to note that the recommended allocations do not address all of the capital needs of the departments. Departmental requests totaled almost $4.6 million. Only $1.7 million of these requests were recommended for funding by the Budget Committee. This recommended budget is based upon no increase in the mill levy. FINANCIAL IMPLICATION: As described above and on the attached exhibits RECOMMENDATION: President Farley recommends Board of Regents approval of the FY99 Operating Budget and Capital Improvements Budget as summarized above and detailed on the accompanying exhibits. _____________ ______________________________ (date) Jerry B. Farley, President Agenda Item No. V. A. 2. Washburn University Board of Regents SUBJECT: FY00 Preliminary Budget Request DESCRIPTION: In April 1998, the Budget Committee of the Kansas Board of Regents prepared guidelines for the preparation of the FY00 budget. These guidelines will be presented to the Kansas Board of Regents at their May 14, 1998 meeting. The budget guidelines to be presented are as follows: Tuition rate increases of approximately 2.4% No change in technology fees, currently at $1 per SCH Salary increase program providing 3.6% base increase plus another 4% for faculty Other Operating Expense (OOE) of 2.4% with an additional 1% for libraries 1% of each campus' budget to be used for campus enhancements Upon the approval of these guidelines, the Kansas Board of Regents' institutions and Washburn University will be required to submit FY00 budget requests to the Kansas Board of Regents at their June 25, 1998 meeting. In order to meet this due date, Washburn's FY00 preliminary budget needs to be approved by the University's Board of Regents at the June 10, 1998 meeting It is proposed that the following guidelines be used by the Administration in the preparation of the FY00 Preliminary Budget Request to be submitted to the Kansas State Board of Regents. Washburn University FY00 Preliminary Budget Guidelines No tuition rate increase. The focus will be on requesting an equity grant to make Washburn's state aid comparable to the other Kansas Board of Regents' institutions. Salary increase recommendations will be based upon the salary study that is nearing completion. OOE increases of 2.4% with an additional 1% for libraries Campus enhancement requests focusing on: * Increase scholarship funding by a minimum of $250,000 for targeted areas (e.g., leadership program, athletics, etc.) * Minimum of $300,000 for the continuation of the marketing plan just adopted by the University * Technology enrichment across the curriculum. Based upon FY99 requests, a minimum of $164,000 will be needed for this initiative. * Enhancements in student life and student services. * Outcome based performance measures whereby, in addition to the state-aid operating grant, additional state funding is provided based upon the number of graduates produced by the institution. With the Regents' approval of these preliminary guidelines, the Administration will prepare the FY00 Budget Request for submittal to the Kansas State Board of Regents in the format specified. This FY00 Budget Request will be brought to the June 10, 1998 meeting for approval by the Board of Regents prior to being forwarded to the State Regents. RECAP OF SCHEDULE FOR FY00 PRELIMINARY BUDGET REQUEST * May 13, 1998 Washburn Board of Regents approve FY99 Budget and preliminary FY00 guidelines * May 14, 1998, State Regents approve FY00 guidelines and concept. * June 10, 1998, Washburn Board of Regents approve FY00 budget packet to be submitted to State Regents. * June 25, 1998, State Regents accept and approve the FY00 budgets submitted by the institutions. (Note: last year the State Regents did not act upon the Washburn budget request until their September meeting.) FINANCIAL IMPLICATIONS: To be determined when total budget request is completed. RECOMMENDATION: President Farley recommends the approval of the FY00 preliminary budget guidelines as outlined above, subject to final approval of the Regents at the June 10, 1998 meeting. _____________ ___________________________ (date) Jerry B. Farley, President Agenda Item No. V. A. 3. Washburn University Board of Regents SUBJECT: Washburn University Retirement Program DESCRIPTION: Washburn University, through its contributions to TIAA-CREF provides a marvelous program for our employees. This retirement program was established for a number of reasons including three that are very important: 1) to meet our social obligation of providing our retirees with an adequate, secure income during retirement; 2) to provide an incentive for employees to view the University as a long-term employer, and; 3) to view retirements as an integral component of the overall compensation package. Thus, any discussion and decisions about the retirement plan should focus on these longer term outcomes. Often universities tend to look at the inputs to the retirement plan; the annual percentage contributions. Certainly retirement contributions are just another form of compensation and there is often a trade off between current salary and future retirement income. However, our focus should actually be on outcomes, for example, what should retirement income be as a percentage of final salary. This is often referred to as the replacement ratio. The literature would suggest that the appropriate replacement ratios should be in the range of 60-80 percent of current income depending on a number of critical variables. This outcome will then drive the input contribution. In order to arrive at the proper input to achieve the eventual outcome, retirement goals must be adopted, and certain assumptions must be made about retirement age, length of service, investment returns, and investment allocation mixes. Goals for the Washburn University Retirement Program: Washburn University intends to provide all benefit-eligible employees with the opportunity to establish and contribute to a retirement program that will: 1. Provide an adequate level of retirement benefits for those employees with longterm service to the University. 2. Encourage continued service, reward longevity, and reduce turnover. 3. Recognize that the University's contributions to the retirement program are only a part of the employee's retirement planning. Given these goals, we can then focus on assumptions that will enable us to measure how well the University's retirement program meets them. To make this measurement, the following assumptions have been made: Normal retirement age of 65 Average annual salary increase of 3% 25/30 year length of service with the University 7% rate of return on investment of retirement funds Single life annuity at retirement with a 10 year guarantee Maximum social security benefits for age of retiree Worksheet 1 illustrates the expected retirement income of an employee under these assumptions with the University's current 9% contribution. This worksheet also illustrates the expected retirement income of an employee with 25 years of service. The current University contribution results in a replacement ratio, depending on salary level, ranging from 51.8% to 62.6%, below the targeted outcome of 60% to 80%. Worksheet 1 also illustrates the expected retirement income under the same assumptions except with a 1 percentage point increase in the University's contribution from 9% to 10%. With this increase, the expected replacement ratios, again depending on salary level, become 55.6% to 66.4%, slightly improved, but still below our targeted outcome. If our goal is to achieve these outcomes, but require 30 years of service, we can move much closer to the targeted range at the 10% contribution rate. (69.8% to 80.4%) In addition to a possible increase in the University's contribution, there are other changes which we propose. One of the goals is to encourage long-term employment, thus, persons who leave the University after only a short period should not be able to retain the University's contribution. A three year vesting period will achieve this goal. Contributions would begin after the applicable waiting period (one year for employees not previously in a similar plan), but would revert to the University if the employee did not stay for three additional years. It is estimated that the University could recover approximately $40,000 to $50,000 in University contributions with a three year vesting period. Because of our unique funding opportunities and because retirement contributions are actually a part of total compensation, we should be able to improve total compensation and move closer to desirable retirement outcomes by increasing current contribution levels and implementing a three year vesting period without increasing the current benefit fund mill levy. Worksheet 2 illustrates the proposed budget for the employee benefits fund for FY99. FINANCIAL IMPLICATIONS: The University's contribution to the retirement program will increase approximately $225,000. This increase will be funded by an increase in revenue resulting from increases in property valuations assuming a constant mill levy. RECOMMENDATION: President Farley recommends the Board of Regents approve an increase in the contribution rate to the Washburn University Retirement Program from 9% to 10%, and approve the adoption of a three year vesting period for all new employees hired after July 1, 1998. ______________ _____________________________ (date) Jerry B. Farley, President Agenda Item No. V. A. 4. Washburn University Board of Regents SUBJECT: KSDOE Equipment Grant Proposal DESCRIPTION: The 1998 Kansas Legislature has appropriated* $2,000,000 to be distributed to community colleges and Washburn University for the purchase of technology equipment subject to guidelines approved by the State Board of Education. Attached is a copy of the grant application, which was due in the KSDOE office May 1, 1998. KSDOE was willing to accept our grant application in advance of this meeting, but the granting of funds is conditional on the Washburn Board of Regents approval of the grant proposal. Last year, $1,000,000 was appropriated in the same way, and Washburn received a $100,000 grant. * At the time this agenda item was prepared, the Kansas Legislature had not officially approved this appropriation. However, the State Department of Education apparently felt certain enough of the eventual appropriation that it released the Request for Proposals on April 8, 1998. FINANCIAL IMPLICATIONS: Washburn is requesting $270,733 from the grant. The University will be required to match 50% ($135,367) of this figure. Matching funds will come from the capital funds allocated to electronic technology for FY '99. Items 4-11 on the grant are already on the approved list for purchase for next year. Grant funding would be used to purchase items 1-3, which are big ticket items that would meet needs of the greater campus community. RECOMMENDATION: President Farley recommends Board of Regents approval of the KSDOE equipment grant proposal proposed above. _________________ ____________________________ (date) Jerry B. Farley, President Agenda Item No. V. B. 1. Washburn University Board of Regents SUBJECT: Faculty Personnel DESCRIPTION: Dr. Laura Stephenson, Associate Professor of Psychology, has requested a leave of absence due to family concerns for the 1998-99 academic year. FINANCIAL IMPLICATIONS: This would be an unpaid leave of absence. RECOMMENDATIONS: President Farley recommends that the Board approve the above faculty personnel change. _______________ _____________________________ (date) Jerry B. Farley, President Agenda Item No. V. B. 2. Washburn University Board of Regents SUBJECT: Voluntary Phased Retirement DESCRIPTION: At its February 18, 1998 meeting, the Board of Regents approved the voluntary phased retirement plan under which employees meeting applicable criteria could apply for, and receive if deemed in the "best interests of the University", voluntary phased retirement from the University. Under the program approved, the successful applicant would receive a reduced work load for the term of the agreement but continue receiving employee benefits as though she or he were a full-time employee of the University. The program at Washburn University is similar to that of the Kansas Board of Regents state educational institutions. Dr. Donald E. Phillips is the first person to apply for voluntary phased retirement under the new program, making a request for a two year term of voluntary phased retirement. He is a tenured Associate Professor in the Speech Communication Department of the College of Arts and Sciences and has met the minimum service requirement. The academic administration has concluded that it is in the best interests of the University to grant the request. The Speech Communication department recently completed a review and revision of its curriculum to offer "...a contemporary, emphasis-based program composed of concentrations in Legal Communication, Corporate Communication, and Political Communication." Dr. Phillips' area of concentration is Advanced Public Speaking which is no longer a focal area of the Speech Communication program. Dr. Phillips' phased retirement is in the "best interests of the University as (1) sufficient funds in salary savings will be freed up to hire a full-time Assistant Professor for the department; (2) there will be a reduction in required adjunct faculty; and (3) students will have the benefit of an experienced senior faculty member possessing the terminal degree teaching general education courses offered in the department. FINANCIAL IMPLICATIONS: No additional general fund dollars are required; nominal increase in employee benefit contribution funds to provide fringe benefits for new assistant professor in department. RECOMMENDATION: President Farley recommends approval of the attached two year voluntary phased retirement agreement for Dr. Phillips as a quarter-time (.19 FTE) faculty member. ______________ _____________________________ (date) Jerry B. Farley, President Agenda Item No. V. B. 3. a. Washburn University Board of Regents SUBJECT: Corridor Floor Tile Replacement - Stoffer Hall DESCRIPTION: Bids were received on April 14, 1998 to replace the floor tile in all corridors in Stoffer Hall. This project was included as part of the FY98 Capital Improvement Budget and is to replace the original vinyl asbestos floor tiles that are broken, warped, and loose in many areas with new terrazzo type tile. Invitations to bid were sent to five firms, and three bids were received. They were as follows: Zack Taylor Contracting, Inc. $ 81,789.00 Bob Florence Contractor, Inc. $114,649.00 Carpet One $137,064.00 FINANCIAL IMPLICATIONS: Expenditure of $81,789.00 from Account Number 03-00302 (Capital Improvements). RECOMMENDATION: President Farley recommends Board of Regents approval of the low responsive bid from Zack Taylor Contracting, Inc. in the amount of $81,789.00. ______________ ____________________________ (date) Jerry B. Farley, President Agenda Item No. V. B. 4. Washburn University Board of Regents SUBJECT: Liquidated Claims Approval - April 1998 DESCRIPTION: Attached is the list of claims processed for the month of April, 1998 by fund. Following is a capsheet of all claims by fund. The payroll claims will be presented to the Board of Regents for review at the May 13, 1998 meeting through the Chairperson. To the best of my information and belief, I certify that the liquidated claims submitted in this transmittal are in compliance with all applicable laws and University policies. ____________________ __________ JOHN A. MOORE, JR. DATE Fund # Fund Name Total Claims (1) General Fund $1,229,177.49 (2) Debt Retirement and Construction Fund 0 (3) Building and Construction Fund 94,942.64 (4) Endowment Fund 0 (5) Student Loan Fund 1,100.00 (6) Employee Benefit Contribution Fund 0 (7) Liability Expense Fund 150.00 (8) Restricted and Agency Fund 279,346.59 (9) Plant Fund 0 (11) Development Fund 0 (13) Government and Research Fund 44,772.86 Sub-Total 1,649,489.58 Payroll Payroll Withholding ACH Transactions *Wire Transfers (Investments) **Wire Transfers (Bond Payment to State) Total ____________ ______________________________ (date) Jerry B. Farley, President Agenda Item No. V. B. 5. Washburn University Board of Regents SUBJECT: Public Fund Investments DESCRIPTION: The Treasurer reports the following public fund investments: Amount Investment Period Public Fund Rates Wall Street Journal Rates T-Bill Rate Successful Bidder Rate $3,325,000 180 days 5.36% 5.58% 5.075% MIP's 5.36% Bids for investment of the University's public funds are solicited from area financial institutions in accordance with University policy and in conformance with State law regarding public fund investment (K.S.A. 9-1401 et. seq.) FINANCIAL IMPLICATIONS: This investment will generate the following interest income at maturity: General Fund $47,812.28 Agency Fund $21,298.99 Employee Benefit Fund $10,340.18 Debt Retirement & Construction Fund $ 2,297.82 Building Construction Fund $ 6,628.32 Total $88,377.59 RECOMMENDATION: President Farley recommends approval by the Board of Regents of the Public Fund Investments reported in the description above. __________ ____________________________ (date) Jerry B. Farley, President Agenda Item No. V. C. 1. Washburn University Board of Regents SUBJECT: Campus Residential Life DESCRIPTION: At the February 18, 1998 and March 18, 1998 meetings of the Board of Regents, the concepts of the University's retention and marketing plan were discussed. One of the assumptions upon which these plans are being developed calls for increasing the opportunities for our students to experience the benefits of an active campus residential life. The importance of providing this opportunity to our students was also emphasized in the President's inaugural address on April 18, 1998. In order to support the objectives of the University's retention initiatives, marketing plan, and the vision statement for the University, additional on-campus residential space is essential. One of the primary considerations in developing a residence facility is to determine its purpose. At Washburn, we should no longer ascribe to the theory that residential living is simply "housing students." To any student, and in particular first year students, academics are very important, but a well-rounded social life plays a vital part in creating a sense of accomplishment and a feeling of connection with the university. Living on the Washburn campus not only allows the opportunity to interact with a diverse population, but it also underscores a sense of economy and safety. In addition, on-campus activities focus on clubs, organizations, student support groups and academic support opportunities that coincide with future goals or span cultural, political, athletic, religious and social interests. A new residence center must be a place designed to immerse the students in a stimulating positive atmosphere, a place where intellectual achievement, growth and inquiry are part of the lifestyle, a place where students and faculty would interact outside the classroom to the benefits of both groups. Vital features would include: Appropriate living quarters designed to match current lifestyles Technologically appropriate (state of the art, information intensive, environment) Faculty-in-Residence Aesthetic environment for creative learning Visiting Scholars suite Art Gallery space Browsing library and reading room Gathering places focused on the importance of socialization Services that are lifestyle adapted The students of today, and in the future, will have a radically set of needs. Just as telephones were added to the residential living rooms in the 60's, computer networking, interactive cable vision, and telemarketing options are all conveniences which should be incorporated into facilities as they are constructed to cater to students, not as "warehouse elements," but as a consuming public. Needless to say, interactive technology will facilitate more academic options from the student's living quarters at times personally convenient to the individual. Larger rooms with individual environmental controls, more private or semi-private bathrooms, coupled with continuous storage options should be a part of a new residential facility for students. Students appear to be seeking greater privacy, larger spaces, greater control over their living spaces, and total connectivity to a variety of telecommunication options. The Administration of Washburn University is in the process of developing a new living design that will accommodate both the issues of cost and student preferences. An objective of this effort is to create on-campus residential opportunities for our students in the core of the campus. This effort is extremely important as we begin to implement recruitment and marketing strategies to increase enrollment to 7,000 students. The Administration is proposing the construction of a 350 bed residential facility in the core of the campus that will address the current and antici- pated needs of the students. A market survey is currently being conducted by Central Research and Consulting to validate that student demand will be adequate to fill the facility at its capacity, given the recruitment strategy and marketing plan of the University. FINANCIAL IMPLICATIONS: The preliminary cost estimate for this facility and the financial plan are illustrated on Exhibits 1 and 2. RECOMMENDATION: President Farley recommends the Board of Regents approve in concept this campus residential life proposal, authorize expenditure of $250,000 from University reserves for preliminary design development of the project (approximately 2.3% of the projected construction cost), and authorize the Administration to proceed with the financial plan as outlined. ______________ ____________________________ (date) Jerry B. Farley, President