Mr. Kevin C. Melcher, Vice Chair Mr. Robert J. Blakely Mr. Ron Knecht Mr. James Dean Leavitt Mr. Michael B. Wixom

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1 Minutes are intended to note (a) the date, time and place of the meeting; (b) those members of the public body who were present and those who were absent; and (c) the substance of all matters proposed, discussed and/or action was taken on. Minutes are not intended to be a verbatim report of a meeting. An audiotape recording of the meeting is available for inspection by any member of the public interested in a verbatim report of the meeting. These minutes are not final until approved by the Board of Regents at the September 2012 meeting. BOARD OF REGENTS* and its BUSINESS & FINANCE COMMITTEE NEVADA SYSTEM OF HIGHER EDUCATION Ballrooms B & C Joe Crowley Student Union University of Nevada, Reno 87 West Stadium Way, Reno Thursday, May 31, 2012 Video Conference Connection to: System Administration, Las Vegas 5550 West Flamingo, Conference Room and Great Basin College, Elko 1500 College Parkway, Berg Hall Conference Room Members Present: Others Present: Mr. Mark Alden, Chair Mr. Kevin C. Melcher, Vice Chair Mr. Robert J. Blakely Mr. Ron Knecht Mr. James Dean Leavitt Mr. Michael B. Wixom Mr. Dan Klaich, Chancellor Mr. Mark Stevens, Vice Chancellor, Finance Mr. Henry Stone, System Counsel Ms. Sandi Cardinal, Assistant Vice Chancellor Mr. Larry Eardley, Assistant Vice Chancellor Mr. Scott G. Wasserman, Chief of Staff and Special Counsel Dr. Maria Sheehan, President, TMCC Dr. Neal J. Smatresk, President UNLV Dr. Marc Johnson, President UNR Dr. Carol Lucey, President, WNC Ms. Patty Charlton, CSN Ms. Sarah Bousman, DRI Dr. Ellie Oppenheim, DRI Mr. Steven Salaber, DRI Ms. Sonja Sibert, GBC Mr. Buster Neel, NSC Mr. Vic Redding, NSHE Ms. Glenda Krietlow, SCS Ms. Michelle Noel, TMCC Mr. Dave Roberts, TMCC Ms. Rachel Solemsaas, TMCC Mr. Gerry Bomotti, UNLV (BUSINESS & FINANCE COMMITTEE 09/06/12) Ref. BF-2a, Page 1 of 9

2 Business & Finance Minutes Page 2 Others Present: (Continued) Mr. Jim Livengood, UNLV Mr. Robert E. Dickens, UNR Ms. Cary Groth, UNR Mr. Tom Judy, UNR Mr. Bruce Shively, UNR Mr. Ron Zurek, UNR Ms. Peggy Dupey, UNSOM Ms. Kristine Nelson, UNSOM Dr. Jean Regan, UNSOM Dr. Thomas Schwenk, UNSOM Mr. Steve Gronstal, GRAD President, DRI was also present. Chair Alden called the meeting to order at 9:14 a.m. with all members present. 1. Information Only Public Comment (Agenda Item #1) None. Chair Alden asked Vice Chair Melcher to assume the duties of Chair. 2. Approved Consent Agenda (Agenda Item #2) The Committee recommended approval of the Consent Agenda. 2a. Approved Minutes The Committee recommended approval of the March 1, 2012, meeting minutes. (Ref. BF-2a) 2b. Approved Third Quarter Fiscal Year NSHE All Funds - The Committee recommended acceptance of the third quarter fiscal year All Funds report for the NSHE. (Ref. BF-2b(1) & Ref. BF-2b(2) are on file in the Board Office.) 2c. Approved Third Quarter Fiscal Year Budget Transfers State Supported Operating Budgets - The Committee recommended acceptance of the third quarter fiscal year budget transfers of state appropriated funds. (Ref. BF-2c(1) & Ref. BF-2c(2) on file in the Board Office.) 2d. Approved Report on Campus Crime Statistics - The Committee recommended acceptance of the report which includes current and historical data on various crimes that have occurred on each NSHE campus. (Ref. BF-2d(1) & Ref. BF- 2d(2) on file in the Board Office) 2e. Approved Handbook Revision, Delinquent Student Accounts The Committee recommended approval of a revision to the existing policy concerning delinquent student accounts (Title 4, Chapter 17, Section 2). (Ref. BF-2e on file in the Board Office.) Regent Alden moved approval of the Consent Agenda. Regent Wixom seconded. Motion carried. (BUSINESS & FINANCE COMMITTEE 09/06/12) Ref. BF-2a, Page 2 of 9

3 Business & Finance Minutes Page 3 3. Information Only Third Quarter Fiscal Year Fiscal Exception Report (Agenda Item #3) - The third quarter fiscal year Fiscal Exception report was presented. (Ref. BF-3a & Ref. BF-3b on file in the Board Office.) Mr. Eardley indicated that the fiscal exception report is used by the institutions to provide quarterly updates on all self-supporting budgets that experience deficits or negative cash balances. An analysis of the third quarter fiscal exception report determined the following accounts required reporting. The UNR Fire Science Academy (FSA) operating and construction accounts were reported with a combined cash deficit of $12.31 million for the third quarter of fiscal year , which represents an increase of $54,000 in the deficit over the second quarter of fiscal year reported deficit of $12.25 million. The FSA was closed effective December 1, 2011, and the deficit will continue to be funded with institutional borrowings until the capital debt is retired and at that time any additional future funds will be used to reduce the remaining operating deficit. Federal funds for the purchase of the FSA had been made available and the close of escrow is pending. The University of Nevada, Reno Intercollegiate Athletics (ICA) program reported a cash deficit of approximately $7.76 million through the third quarter of fiscal year which is an increase of $1.3 million over the 2 nd quarter deficit. ICA projects an end of the year negative cash balance of $2 million, but due to expenditure controls and increased fundraising efforts the ending deficit has been revised to $1.5 million. Negative cash balances are carried through most of the year due to revenues being realized in the last quarter from various entities. UNR will become a member of the Mountain West conference (MWC) in 2012 and anticipates enhanced revenues associated with the conference of approximately $2 million will be applied to operating deficits. Regent Alden asked what the short and long range plan was to close the deficit. Mr. Zurek stated they planned to get to a breakeven point in fiscal year The university continues to be on track with the plan. Regent Melcher was pleased that the deficit was being addressed and that they understand that it is not the place to be. President Johnson stated that even though they carry the deficit through the year the projected accumulated deficit will be decreased to $1.5 million. They have increased their fundraising efforts as recommended. This year there were no distributions from conferences because of the change in conference. Mr. Eardley indicated that the third quarter FY 12 status report of state appropriations for each institution and unit of the System reflects the original and current budgets, the actual revenues and expenditures to date, the projected revenues and expenditures to fiscal year end and the estimated ending account balances. Student fee revenue collections for the community colleges, School of Medicine and the University of Nevada, Las Vegas are projected to be less than current budget in total and to exceed current budget in total at University of Nevada, Reno and Nevada State College. All other NSHE institution budget accounts anticipate revenues to be collected as budgeted. The NSHE will seek Board of (BUSINESS & FINANCE COMMITTEE 09/06/12) Ref. BF-2a, Page 3 of 9

4 Business & Finance Minutes Page 4 3. Information Only Third Quarter Fiscal Year Fiscal Exception Report (Agenda Item #3) (Continued) Regents and Interim Finance Committee (IFC) approval to expend student fee revenues projected to exceed line item budgeted student fee categories. Chair Alden resumed his duties as Chair. Regent Knecht stated he had questions on Consent Item 2d and asked that the item be reopened. 2d. Approved Report on Campus Crime Statistics (Continued) UNR crime statistics show that on campus/dorm/residential liquor law violations were 23% higher in 2011 than in Drug law violations increased 160% in 2010, but decreased 38.5% in At UNLV drug and liquor law violations for 2011 decreased by 61.5% and 78.9%. Regent Knecht asked for an explanation as to the increase in liquor law violations at UNR and why at UNLV it increased but then began to decrease. President Johnson noted UNR has improved their enforcement of drug and liquor laws and this is the result of that effort. Regent Knecht asked if the same reasons applied at UNLV. Mr. Zurek stated the drug law violations were correct, but it was an issue of very small numbers. Mr. Zurek stated they have requested that on further reports that the absolute numbers and percentages be used for the fairest comparison. Mr. Zurek stated they have sought grants to help with the increased enforcement. President Smatresk stated that enforcement is rigorous at UNLV and the numbers are very small. UNLV does have great programs on campus to reduce drug and alcohol use and they are very effective. President Smatresk also pointed out that whichever school hosts the UNR vs. UNLV football game will invariably have an increase in arrests. 4. Approved Additional Student Registration Fee Revenues FY State Operating Budget (Agenda Item #4) The Committee recommended approval to expend excess student registration fee revenues for the purpose of funding additional adjunct faculty costs and to seek Interim Finance Committee authorization to expend any additional student fee revenues, not utilized for adjunct faculty, within the State Supported Operating Budget for fiscal year (Ref. BF-4 on file in the Board Office.) Mr. Eardley indicated that per the State authorized expenditure act (SB503), NSHE may, with IFC approval, expend any additional student registration fee revenues not utilized for instructional faculty costs, in addition to the student fee amounts in the state budget. Approval is requested for the System to seek IFC approval to expend excess student fees, totaling approximately $1.7 million for TMCC, UNLV, GBC and UNR. Regent Knecht moved approval to expend excess student registration fee revenues. Regent Leavitt seconded. Motion carried. Per the authorized expenditure bill the System may expend any additional registration fee revenues without approval of the IFC for the purpose of funding part time faculty costs necessary due to enrollments exceeding the budget. Board approval is requested to expend excess student registration fee revenues totaling $101,217 for NSC. (BUSINESS & FINANCE COMMITTEE 09/06/12) Ref. BF-2a, Page 4 of 9

5 Business & Finance Minutes Page 5 4. Approved Additional Student Registration Fee Revenues FY State Operating Budget (Agenda Item #4) (Continued) Regent Knecht moved approval to expend excess student registration fee revenues. Regent Blakely seconded. Motion carried. 5. Approved Additional student Surcharge, Tuition and Registration Fee Revenues FY State Operating Budget (Agenda Item #5) The Committee recommended approval to seek Interim Finance Committee approval to expend, within the State Supported Operating Budget, in fiscal year , student surcharge fee revenues and additional student tuition and registration fee revenues projected to be collected from the Board of Regents approved tuition and fee increases. (Ref. BF-5 on file in the Board Office.) Board of Regents approval is requested for the NSHE to seek IFC approval per SB 503, to expend, within the State Supported Operating Budget, in fiscal year , student surcharge revenues for the following NSHE institutions: University of Nevada, Reno $ 6,677,532 University of Nevada, Las Vegas $ 9,188,595 Nevada State College $ 727,688 College of Southern Nevada $ 4,446,190 Great Basin College $ 400,874 Truckee Meadows Community College $ 1,348,769 Western Nevada College $ 600, Total IFC Request $ 23,389,723 Board of Regents approval is requested for the NSHE to seek IFC approval per SB 503, to expend, within the State Supported Operating Budget, in fiscal year , additional student registration fee and nonresident tuition revenues for the following professional schools: School of Medicine $ 451,431 School of Dental Medicine $ 1,523,372 School of Law $ 914, Total IFC Request $ 2,889,157 Board of Regents approval is requested for the NSHE to seek IFC approval per SB 503, to expend, within the State Supported Operating Budget, in fiscal year , additional student registration fee revenues anticipated to be collected from the 8% undergraduate fee increase, for the following NSHE institutions: (BUSINESS & FINANCE COMMITTEE 09/06/12) Ref. BF-2a, Page 5 of 9

6 Business & Finance Minutes Page 6 5. Approved Additional student Surcharge, Tuition and Registration Fee Revenues FY State Operating Budget (Agenda Item #5) (Continued) University of Nevada, Reno $ 1,959,373 University of Nevada, Las Vegas $ 2,690,868 Nevada State College $ 223,248 College of Southern Nevada $ 1,722,579 Great Basin College $ 150,658 Truckee Meadows Community College $ 522,877 Western Nevada College $ 232, Total IFC Request $ 7,501,755 Regent Knecht moved approval to seek IFC approval to expend, within the State Supported Operating Budget, in fiscal year , student surcharge fee revenues and additional student tuition and registration fee revenues projected to be collected from the Board of Regents approved tuition and fee increases. Regent Blakely seconded. Motion carried. 6. Approved Transfer of State Appropriated Funds Between Appropriation Budgets, UNR (Agenda Item #6) The Committee recommended approval to seek Interim Finance Committee approval, pursuant to A.B. 580, Section 50, of the 2011 Legislative Session, to transfer $4,539,082 in appropriated state funds from UNR s main budget account to the University of Nevada School of Medicine budget account in order to offset budget reductions in FY (Ref. BF-6 on file in the Board Office.) Mr. Eardley reported that UNR is requesting IFC approval to transfer in 2013 $4.5 million of funds. Regent Alden clarified that UNR was requesting to transfer from the operating budget to the School of Medicine. Chancellor Klaich noted that was a part of the overall budget reduction plan and budget closing that was presented by UNR to the Board and is consistent with action already taken in this regard. Regent Leavitt asked what these funds were being used for in the past. President Johnson stated this was the overall approach to budget reduction for this biennium. When the accreditation Board warned UNR that the resources going into the medical school were pretty slim they moved to protect that budget from reduction. The transfer comes from all other allocation areas and general operations. Regent Melcher moved approval to seek IFC approval, pursuant to A.B. 580, Section 50, of the 2011 Legislative Session, to transfer $4,539,082 in appropriated state funds from UNR s main budget account to the University of Nevada School of Medicine budget account in order to offset budget reductions in FY Regent Blakely seconded. Motion carried. (BUSINESS & FINANCE COMMITTEE 09/06/12) Ref. BF-2a, Page 6 of 9

7 Business & Finance Minutes Page 7 7. Approved - TMCC S 2002 Government Obligation (GO) Bonds (Agenda Item #7) The Committee recommended approval of a resolution (1) requesting the State Board of Finance to call the TMCC 2002 GO Bonds on the redemption date; (2) to defease the 2002 Bonds; (3) to pay the costs of the defeasance and redemption of the 2002 Bonds on the Redemption date; and (4) to delegate the authority to NSHE s Vice Chancellor for Finance to establish an irrevocable escrow account to fund the defeasance of the bonds. (Ref. BF-7a & Ref. BF-7b on file in the Board Office.) President Sheehan stated this was a request to retire debt service on GO Bonds that helped purchase two buildings across from the Meadowood Mall. TMCC is occupying one building and leasing the other. There is a unique opportunity, with one time funds that have been saved, to retire the debt. This will help TMCC help secure their future because they will not have to pay $687,000 per year and that money can go toward restoration of some of the budget cuts. Regent Knecht asked what the effective interest rate currently is on the principal. President Sheehan believed it was 4.6%. Mr. John Peterson, JNA Consulting, stated that the 2002 Bonds of the state are outstanding at interest rates of 4.5% to 5%. Regent Knecht noted that if they took a bond issue to market today, they would be looking at an interest rate a little lower, and asked if they had looked at refinancing. Mr. Peterson stated that there were funds available that were unspent that TMCC would lose on July 1, which is why they are prepaying with cash instead of refinancing. Regent Knecht asked where this money came from. President Sheehan stated that a major portion is because of entrepreneurial ventures that TMCC has been fiscally conservative with. Ms. Rachel Solemsaas noted that the pot of money comes from two sources: 1) $680,000 from state funds; and 2) One of the buildings is being leased and they generate savings from bookstore and summer programs. Ms. Solemsaas stated they did attempt to join in the last refinancing, but because they receive rental money, they would not be able to take advantage of the tax exempt financing. Regent Knecht stated that up to a year ago they began to compile a list of funds/resources that the institutions have, so the Regents would know what their flexibility was in budget matters. He asked if this money was identified in that list. Chancellor Klaich disclosed for the record that prior to working for the System he participated in the sale of this property to TMCC and he has not participated in any way in the presentation of this item. Chancellor Klaich reiterated that this was a cumulative savings, but he did not know if it was disclosed in that analysis, but would report back with the answer. Regent Knecht moved for approval of a resolution (1) requesting the State Board of Finance to call the TMCC 2002 GO Bonds on the redemption date; (2) to defease the 2002 Bonds; (3) to pay the costs of the defeasance and redemption of the 2002 Bonds on the Redemption date; and (4) to delegate the authority to NSHE s Vice Chancellor for Finance to establish an irrevocable escrow account to fund the defeasance of the bonds. Regent Melcher seconded. (BUSINESS & FINANCE COMMITTEE 09/06/12) Ref. BF-2a, Page 7 of 9

8 Business & Finance Minutes Page 8 7. Approved - TMCC S 2002 Government Obligation (GO) Bonds (Agenda Item #7) (Continued) Regent Blakely stated that it was always a good idea to use an asset to pay down a debt. Motion carried. 8. Approved University of Nevada School of Medicine (UNSOM) Purchase and Finance of a New Practice Management System and an Electronic Medical Records System (Agenda Item #8) The Committee recommended approval of the University of Nevada School of Medicine to purchase and to finance, with a 5-year Taxable Note up to $6,250,000, (see Exhibit - Loan Resolution on file in the Board Office), a new Practice Management System and an Electronic Medical Record System for the UNSOM practice plan. (Ref. BF-8a & Ref. BF-8b on file in the Board Office.) Dean Tom Schwenk stated that the School of Medicine and the Practice Plan has labored all these years under a manual, inefficient, very old fashion approach, to its practice management, billing collections, insurance authorizations, documentation, etc. Now is a critical time to propose financing of $6.25 million for a new Practice Management System and an Electronic Medical Record System. The RFP has been sent, and eleven proposals were received. Three and an alternate have been chosen and will be reviewed in much more detail. The estimate thus far shows that this system would bring an increased performance of 10%. A more detailed analysis shows roughly a $5 million a year improvement in revenue enhancements and $1.5 million improvement in decreased expenses. The School of Medicine is one of the last to install this type of system. It is critical from a clinical quality perspective, but also from a teaching perspective to have these systems in place. The first year s payments have been capitalized and the Dean s office will make the payments in years two and three. Regent Wixom stated he was supportive of this proposal. Regent Wixom noted that it is ultimately the System s responsibility to make these payments if the School of Medicine falters so he wanted to make sure that the Board has some comfort that the School of Medicine can and will continue to make the payments so this does not become a System responsibility. Dean Schwenk stated that they have reserves in place and the detailed analysis leads to a much more confident scenario showing it will pay for itself rather quickly. Regent Wixom complimented the School of Medicine for working so hard in the constraints of an antiquated system. Regent Wixom asked if Dean Schwenk could speak to the compatibility of the different systems at UMC and in the North. Dean Schwenk stated it was an important question. They have put a tremendous amount of thought into this process. There are two separate IT systems in this proposal. It is critical that the North and South have the same finance and reporting platform. They will then be able to link the clinical to the business platform, but it is quite possible that they are two different clinical aspects. Regent Wixom stated through the years there have been major concerns at the medical school. It is vitally important that as a Committee and a Board that they recognize the progress that has been made in this regard and the successes. Regent Knecht asked if any of the upgrades are mandated by any of the provisions in the Patient Protection and Affordable Care Act (PPACA). Dean Schwenk stated there are substantial revenue enhancements made available to practice plans who adopt these systems. Beginning in 2015 the lack of a specific plan will be punitive. (BUSINESS & FINANCE COMMITTEE 09/06/12) Ref. BF-2a, Page 8 of 9

9 Business & Finance Minutes Page 9 8. Approved University of Nevada School of Medicine (UNSOM) Purchase and Finance of a New Practice Management System and an Electronic Medical Records System (Agenda Item #8) (Continued) Regent Knecht moved approval for the University of Nevada School of Medicine to purchase and to finance, with a 5-year Taxable Note up to $6,250,000, (see Exhibit - Loan Resolution), a new Practice Management System and an Electronic Medical Record System for the UNSOM practice plan with the committee s expectation that the School of Medicine will cover all costs with their resources. Regent Wixom seconded. Motion carried. Regent Melcher was glad to see them moving forward with this proposal. Regent Leavitt stated this was an impressive accomplishment in Dean Schwenk s first year and that he and his team deserved a lot of credit. 9. Information Only New Business (Agenda Item #9) None. 10. Information Only Public Comment (Agenda Item #10) None. The meeting recessed at 10:13 a.m. Prepared by: Submitted for approval by: Angela R. Palmer Special Assistant and Coordinator to the Board of Regents Scott G. Wasserman Chief of Staff and Special Counsel to the Board of Regents (BUSINESS & FINANCE COMMITTEE 09/06/12) Ref. BF-2a, Page 9 of 9