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AGENDA: Business Meeting

1. General Business

a. Trustee Business

i) Minutes. Approval of minutes for meeting of September 10 and October 14, 1988.

The Administrative Action Reports of September 26 and October 25, 1988 are included in the minutes for this meeting.

ii) Board of Governors, Riley Memorial Association. Terms as a member of the Board of Governors of Riley Memorial Association for the following persons expire in November, 1988.

Mrs. Richard D. Wood
Mr. Thomas Ehrlich
Mr. Robert R. Baxter
Mr. Harry L. Bindner

Election by the Board of four Governors to serve three-year terms ending in 1991 was requested.

Reappointment of the above named members was unanimously approved, on motion duly made and seconded.

iii) Municipal Recreation, Inc. The term of Nicholas Kellum expires December, 1988. Election by the Board was requested of a Director for a three-year term ending in 1991.

Reappointment of Nicholas Kellum was unanimously approved, on motion duly made and seconded.

b. President's Report

Efforts continue to develop the plans to enhance the 8 campuses of I.U. Help will be needed from all in the months ahead to gain the necessary resources from the General Assembly to implement those plans. A President's Advisory Council is being established to aid in that effort.

Available for the Trustees at this time is the Fact Book for 1988-89 which contains among the extensive statistics dramatic indicators of the importance of the University.

An improvement in the statistics regarding returning students was reported, achieving the goal set a year ago to enhance retention on all eight campuses. As an example, on Bloomington's campus, the percentage of students returning after their first year in 87-88 of 78.4% is up to 79.5% in 88-89. Efforts will continue to improve this figure each year.

The President reported that Professor Philip J. Rutledge would be joining the President's office on a half time basis as Special Assistant focusing on enhancing the Black and Hispanic presence, particularly of students, on all campuses. The appointment was applauded by the Board.

With the enthusiastic endorsement of the Board of Trustees, the University has extended the contract of Head Football Coach Bill Mallory through to June 1997. The President commended his outstanding work which represents both the best in athletics and the best in support provided to student athletes.

In closing, the President extended a special thank you to Chancellor Peggy Elliott and her staff for the outstanding hospitality extended to all during the two day meeting on the Northwest campus.

2. Reports from Committees

a. Student Affairs Committee:

Trustee Gonso reported that student representatives from all the campuses planned in the near future to explore in depth the alcohol issue both in committee and with the Board. He summarized reports from the campuses of Bloomington, Fort Wayne, Kokomo, Southeast, and IUPUI that indicate a strong involvement in community support projects as well as student and campus enhancement efforts.

i) Remarks by Jenny Grecvich, President, Student Government Association, Indiana University Northwest.

President Grevich emphasized both the growth of the campus and student development, citing their problems of appropriate space. She described the situation there as being on the up-curve and asked for support for their future needs.

ii) Remarks by Robin Borr, President Student Association, Indiana University at South Bend.

The mood of excitement on this campus, as described by President Borr, is attributed to a record enrollment of 6600, new academic programs, new facilities, and an elevated image in the community. The regional identity is building, serving area citizens with special needs. The growth has resulted in a need for increased space to support the expansion in student programming. The future needs of an expanding faculty of high quality would require expanded revenues. President Borr appealed to the Board to exert their leadership in the long-term solutions required for continued expansion.

b. Faculty Relations Committee:

Trustee Gates reported that four presenters chaired by Professor Sidney Feldman gave updates in the following areas on the Northwest campus:

1. Laboratory for Environmental Research
2. Urban Teacher Education Program
3. Northwest Medical Center, 32 students, 18 full-time faculty
4. Career Beginnings Program

c. Hospital Committee:

The report given by Trustee Black summarized the following agenda items presented at their meeting:

1. A review of hospital indicators showed them to be at 1/5 of the debt margin anticipated in the budget;
2. The annual financial report was distributed to the Board.
3. A report on the aggressive plan establishing Goals and Objectives for the hospital program;
4. An update on the new Home Health Care Program;
5. Current status of the JCAHO;
6. July l to January l change affecting Hospital pricing;
7. Announcement of the first successful pancreatic transplant.

d. Architectural Committee:

Three items were presented to the Board by Trustee Dye:

1. Department of Natural Resources Building, $280,000. The DNR provides $210,000, IU $80,000 (from the Bloomington campus replacement fund).
2. Changes in the design for the Engineering and Technology Phase II Building, IUPUI.
3. The "New Tamarack" Building, IU Northwest, which received $8.3 million from the General Assembly. (The design came in over budget so adjustments have to be made. No delay is anticipated.)

e. Investment Committee.

i) Preliminary Resolution Regarding the Issuance of Indiana University Guaranteed Tuition Certificates: Approval by the Board was requested for a preliminary resolution regarding the issuance of Indiana University guaranteed tuition certificates. Trustee Dye called upon Vice President John Hackett to present background information on the proposed program of Guaranteed Tuition Certificates. Vice President outlined the program as follows:

REVIEW OF GUARANTEED TUITION CERTIFICATES PROPOSAL

I. Characteristics

A. Denominated in credit hours.
B. Initial sale 15 hours - buy 3 hour increments following initial purchase.
C. Initial price - 15 hours for $1,000 - 6% premium over current Bloomington rate of $937, or $66.66 VS. $62.50 per hour - premium helps pay administrative cost.
D. May be redeemed for credit hours only.
E. Issued serially in selected 3-year time frame within a 20-year maturity period.
F. If redeemed beyond the 3-year time frame, incremental increase in tuition cost must be paid.
G. Out-of-state students may acquire GTC's, but they are good for in-state portion of tuition only. Student must pay out-of-state premium in cash.
H. Upon withdrawal, student will be issued a new or partial GTC, no cash redemption.

II. Secondary Market

A. Maintain a secondary market to permit buying and selling of GTC's.
B. Liquidity of a secondary market increases willingness to acquire GTC, e.g., if a student elects on to attend IU or fails to gain admission, the appreciated value of the GTC can still be realized.
C. Commercial banks and/or IU may maintain the secondary market.
D. Market value will reflect current tuition rate, e.g., if tuition is currently 20% higher than the rate at the time of issue, the market price will reflect it.

III. Initial Issue

A. Managed by Indianapolis Bank Consortium – Bank One, Indiana National and Merchant's Bank.
B. "Best efforts" issue, not underwritten by banks – reduces issuance cost and underwriting is not necessary.
C. Full marketing campaign through nearly 200 banking offices throughout the state.
D. Wide advertising program – working with IU Alumni Association.
E. Initial issue could reach $30 million, but will not permit more than 20% of forecast tuition to be paid by GTC redemption in any 3-year time span.
F. Potential Market:
BCH = 800,000
BTPH = 62.50
Maturity = 20
Limit = .2
BCH x BTPH x M x L = $200 M
$200 M/$30 M = 6.6%
G. Cannot be redeemed until 1993. Expect the distribution to be "bell shaped" with heaviest concentration between 5 and 15 years.
H. Issue will be registered rather than coupon issue.
I. Advertising will include nationwide campaign directed at alumni.

IV. Investments

A. Proceeds will be invested in a portfolio of high-grade fixed income securities. Initially, the portfolio will be comprised of U.S. Treasurey Securities. Hope to amend the state law to permit us to invest in AA corporate bonds and commercial paper.
B. Financial models indicate that a modest profit could be realized even if tuition costs advanced at annual rate of 9%.
C. Portfolio maturity will be balanced to avoid unnecessary risk in timing.
D. 6% premium also helps with portfolio protection.
E. Money managed in a trust. Trustee will release funds to the university upon presentation of redeemed GTC's.
F. The amount released will be equal to current tuition rate x credit hours redeemed.
G. In the event surpluses build up in the trust, the university may not have full access. A formula will be designed to permit partial release of accumulated surpluses.

V. Board of Trustees Review

A. Requesting tentative approval to go forward with GTC plan at November meeting.
B. Will request fund approval to all terms and conditions at December meeting.
C. Initial issuance date is scheduled for December 12, 1988. Offering will be closed in mid-January.
D. If successful, we anticipate two new offerings each year, but secondary market will always be available.

PRELIMINARY RESOLUTION REGARDING THE ISSUANCE
OF INDIANA UNIVERSITY GUARANTEED TUITION CERTIFICATES

WHEREAS, The Trustees of Indiana University (the "University") desires to develop a program providing for the prepayment of certain educational costs of attending Indiana University in order to help assure continued high enrollment in Indiana University and to help assure that the cost of education remains affordable for Indiana residents; and

WHEREAS, the Administration of the University has selected The Indiana National Bank, Bank One, Indianapolis, N.A. and the Merchants National Bank & Trust Company of Indianapolis, d/b/a/ the "Three Bank Group" to assist the University in structuring such a program and to act as placement agent for such certificates; and

WHEREAS, the Board of Trustees desires to begin implementation of such a program in December of 1988;

NOW, THEREFORE, BE IT RESOLVED by the Board of Trustees of the University as follows:

1. The President and Vice President for Finance and Administration of Indiana University and the Treasurer of the Board of Trustees are authorized to proceed, together with Ice Miller Donadio & Ryan as University councel and the Three Bank Group, to develop a program for the issuance of guaranteed tuition certificates and to present such a program for consideration at the Board's December meeting;

2. The President and Vice President for Finance and Administration of Indiana University and the Treasurer of the Board, or any of them, are authorized to approve and distribute or cause the Three Bank Group to distribute a preliminary offering circular regarding the guaranteed tuition certificate program prior to such final approval by the Board of Trustees; and

3. The Investment Committee of the Board is hereby authorized on behalf of the Board to approve a guaranteed tuition certificates and to authorize the execution and delivery of all documents and agreements necessary or appropriate in connection therewith.

Following a brief discussion, Trustee Stoner called for what he described as an historic vote. Approved as presented, on motion duly made and seconded. Trustee Gonso abstained.

ii) Investments Discussion: Trustee Dye presented a legal opinion letter from the firm of Sonnenschein Carlin Nath & Rosenthal stating that the University was under no liability for the changes invoked in the 18-20 Plan at the October 14 meeting of the Board. Also, the same firm issued an opinion on the IRS Code 457, stating that should changes be made in an existing retirement plan, the individual would not be subject to immediate taxation. This correspondence will be circulated to University Counsel Cliff Travis and all Trustees for their records.

In concluding his report, Trustee Dye said that investments were off 3.3% as of September 30, a favorable average in today's climate.

f. Fiscal Committee:

(No report received from Fiscal Committee.)

g. Construction Committee:

Trustee Dye presented the following report of the Construction Committee.

i) Other Construction Matters

Indiana University Purdue University Indianapolis

a. University Hospital Pneumatic Tube System

Approval of the Board was requested to proceed with installation of a Pneumatic Tube System in University Hospital. The system will be utilized in specimen transport and will be connected to the tube transport system of Riley Hospital. The project is estimated to cost $370,000 and will be funded from Hospitals' Repair and Improvement Reserves. Appropriate State approvals will be requested.

b. Clinical Building-First Floor Renovation for Radiological Science Research and Medical Physics

Approval of the Board was requested to proceed with renovation of the first floor of the Clinical Building to provide space for the Radiological Science Research and Medical Physics programs. Estimated to cost $2,240,000, the project will be funded from Radiology Services private practice funds through the Indiana University Foundation. Appropriate State approvals will be requested.

c. University Hospital-Third Floor Renovation for Medical Records Administration Offices

Approval of the Board was requested to proceed with renovation of shell space on the third floor of University Hospital for use by the Department of Medical Records Administration. Estimated to cost $493,000, the project will be funded from Hospitals' Repair and Improvement Reserves. Appropriate State approvals will be requested.

d. Medical Science Building-Fourth Floor Renovation for Biochemistry

Approval of the Board was requested to proceed with renovation of a portion of the fourth floor of the Medical Science Building to accommodate School of Medicine Biochemistry labs and offices. The project is estimated to cost $540,000, will be funded from 1987-89 Capital Appropriations for Repair and Rehabilitation, and appropriate State approvals will be requested.

e. University Hospital-Fourth Floor Renovation for Transfusion Medicine Expansion

Approval of the Board was requested to proceed with renovation of a portion of the fourth floor of University Hospital to accommodate expansion of the Transfusion Medicine unit. Estimated to cost $485,000, the project will be funded from Hospitals' Repair and Improvement Reserves, and appropriate State approvals will be requested.

h. Personnel Committee

Trustee Kettler reported for the Personnel Committee.

i) INDIANA UNIVERSITY - President Ehrlich

a. For Joanne B. Lantz, Professor of Psychological Sciences, the additional appointment as Interim Chancellor, Indiana University Purdue University at Fort Wayne, beginning August 1, 1988.

ii) INDIANA UNIVERSITY-PURDUE UNIVERSITY AT INDIANAPOLIS

Chancellor Bepko

a. For Loren P. Petersen, a change in title from Visiting Professor to Professor of Obstetrics and Gynecology, with tenure, School of Medicine, beginning December 1, 1988.

AWARD OF DEGREES

Approval was requested for the award of degrees as of October 31, 1988.

CONFLICT OF INTEREST

Trustee Kettler reported that Conflict of Interest disclosure statements for 1988-89 had been received from Trustee Joseph M. Black and will be forwarded to the State Board of Accounts.

Trustee Kettler also reported that disclosure statements for 1988-89 received from the University employees listed had been reviewed by the Personnel Committee and will be forwarded to the State Board of Accounts:

Joseph M. Black
W. Phillip Saunders
Maynard Thompson
James A. Tanford

On motion duly made and seconded, Items h. i) and ii) were unanimously approved.

i. Real Estate and Legal Committee

Trustee Motherwell presented the report of the Real Estate and Legal Committee.

i) Indiana University System

a. Exercise of Eminent Domain, Trustee Resolution. In order to expedite the acquisition of real property needed for University purposes, the following resolution was recommended for adoption on this date and to be reviewed at the end of five years:

RESOLUTION

WHEREAS, Indiana Code 4-17-6-1 provides that whenever the Board of Trustees of Indiana University deems it necessary or desirable for the welfare or convenience of the University to acquire real estate for its use, the Board is authorized and empowered to condemn real estate and also provides that the Board of Trustees shall have the rights and powers secured by Indiana Code 32-11-1 dealing with the acquisition of real property by eminent domain;

WHEREAS, Indiana Code 4-17-6-1 also provides that before exercising the power of eminent domain, the Board of Trustees shall secure the written consent of the Governor of the State of Indiana, specifically authorizing acquisition of a particular property by such means;

WHEREAS, Indiana Code 20-12-1-4 authorizes the governing board of Indiana University to delegate such powers and authority as it may possess to the President of Indiana University; and

WHEREAS, this Board considers it necessary and convenient for the benefit of the University to be able to expeditiously acquire property and to request the approval of the Governor to institute an action to acquire real property by eminent domain without delay, and to the end of avoiding delay it is desirable that authority to institute eminent domain actions in behalf of this Board should be delegated to the President of the University:

RESOLVED: The Trustees of Indiana University now delegate to the President of Indiana University all the authority conferred upon this Board by Ind. Code 4-17-6-1 to request, from time to time as he sees fit, from the Governor of the State of Indiana consent to acquire real property by condemnation and, further delegates to the President of Indiana University the authority of this Board to take all other action that the President may consider necessary or convenient to acquire such property by eminent domain or otherwise, following the receipt of the Governor's consent.

3. OTHER BUSINESS

a. Closing comments by Trustee Kettler

On behalf of the Board, Trustee Kettler extended love and prayers to go home with Vice President Doug Wilson for his wife Sue.

b. Adjournment

The Trustees adjourned at 2:46 p.m., to meet again on call of the Secretary on Saturday, December 10, 1988, on the Bloomington Campus.

Janet C. Shirley, Secretary
THE TRUSTEES OF INDIANA UNIVERSITY


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