Policy Board Minutes—7 Feb 2018
UC 402/03

PB members: Nola Agha, Rachel Brahinsky, Brandon Brown, Robin Buccheri, Fernando Comiran, Jen Dever, Doreen Ewert, Joe Garity, Candace Harrison, Malik Henfield, Richard Johnson III, EJ Jung, Dorothy Kidd, Gabe Maxson, Matthew Monnot, Elliot Neaman, Gleb Nikitenko, Mary Jane Niles, Meera Nosek, Julia Orri, Sonja Poole, Christina Purpora, Steve Roddy, Claire Sharifi, Calla Schmidt, Brian Weiner, Annick Wibben

USFFA-FT members: Kathy Nasstrom, Paul Lorton, Jr, Brian Thornton, Matthew Collins, Deborah Malone, Kathleen Col, Kathy Gabor

Guest: Jeff Hamrick, Vice Provost for Institutional Budget, Planning, and Analytics

Minutes from 24 Jan will be approved online

I. Announcements
A. Requests for follow-up data have been sent to Provost Heller
B. The CBA desk copy distribution is nearly complete
C. The Feb 21st PB meeting will cover library issues. Suggestions were taken for later agenda items.

II. New Business

A. Jeff Hamrick (Vice Provost for Institutional Budget, Planning, and Analytics) began by addressing the purpose of his visit. Hamrick explained that the Provost has encouraged him to “make the rounds” and work to increase transparency with key groups such as PB. He said that it is a natural time to visit due to the upcoming submission of the FY19 budget to the Board of Trustees. Due to limited time, Hamrick suggested moving immediately to Q&A.

1. Hamrick said that the draft FY19 operating deficit is currently around $10M, but that this figure is by no means finalized. The reallocative cuts that will need to be made for FY19 are likely to be greater than the cuts made for FY18. He stated that the census date is this week, which is a critical milestone. Hamrick indicated that in years past, discounting trends and headcount shortfalls have led to USF not meeting its net tuition objectives. One challenge we face is with enrolling international students, and we have fallen short in this area over the past several years. Discounting is on the rise because the number of seats available for entering first-year students is much greater than the demand for them. Middle-class real wages have been flat for a very long time, which heightens the extent to which middle-class families seek discounts from the colleges/universities where their children seek to matriculate. This is a powerful nationwide trend and unsustainable. Hamrick compared higher education to the airline industry about 15 years ago; too many seats means lower prices for everybody, with bankruptcies and mergers inevitably following. USF is limited in its ability to expand seats (Hilltop headcount cap) — and there is no guarantee will make good money from more students due to the problem of discounting. Hamrick said that everybody wants to bring in the right number of, and right type of, students for USF. He added that Stanley Nell will no longer be involved in recruiting students from China to USF; that function is now under Michael Beseda’s purview.

2. What is the relationship between the person in your role and the person in Michael Beseda’s (Vice Provost for Strategic Enrollment Management) role? Hamrick explained that he works on the data support and planning/budget side, while Beseda is in charge of leading the conversations around enrollment planning and results. He encouraged the PB to invite Beseda for further conversations. CIPE does not “forecast” the behavior of SEM or Beseda; rather, CIPE provides data support that informs conversations at SEM, the Provost’s Council, the President’s Cabinet, and the Board of Trustees. These conversations relate, among other things, to goal-setting for enrollment management.

3. Monnot asked about strategic enrollment — did we change our strategy? What things is administration specifically doing to make sure we don’t have another year in which we leave 140 beds empty? Hamrick said that human error and poor management were responsible for the dorm vacancies a few years ago. These problems were squarely addressed by personnel changes in SHaRE (Student Housing and Residential Education) and by granting the Umbrella Group (a cross-unit group tasked with smoothly on-boarding incoming students, among other things) some oversight of the process of getting beds filled. For fall 2016, too few students were admitted and tweaks to the financial aid leveraging model did not play out in the way that the consulting firm (Hardwick Day) suggested they would. This led to the start of a number of years of enrollment volatility.

4. Monnot then asked about operating surpluses and mentioned that the University had recently seen a large increase in net assets. Hamrick said that one must be careful when reading Guidestar reports. There is a difference between “net operating income” and “net change in assets.” The latter can be large and positive due to a bull stock market, but the former has been fairly thin for several years as the university has grappled with enrollment and discounting challenges. Net changes in assets cannot really be allocated for operating expenses, e.g., faculty pay increases.

Hamrick reminded PB that appreciation in endowed funds leads to higher endowment payouts, and that those payouts (most of the time) must be used for specific purposes, like student scholarships or endowed faculty chairs. In his own responsibilities, he is more concerned about the operating surplus than the net change in assets, though both are important to the university. Hamrick explained that USF is effectively required to budget for, and generate, operating surpluses. After the close of the fiscal year, operating surpluses can be used to support capital projects and roll-ups to quasi-endowment (which helps grow the total size of the endowment). The upcoming renovations to Harney could cost $60M, for example. While we hope that donors will support these renovations, it is likely that some support from operating surpluses would be needed to complete the project. Entities that want to see USF generate operating surpluses include WSCUC, bond rating agencies, and the Board of Trustees (which has a fiduciary obligation to the university).

5. Monnot also asked about executive salaries and their rapid rate of increase. How were these determined? Hamrick said that there was a misinterpretation regarding Guidestar reports during recent contract negotiations. Hamrick said that, from his point of view, the key executives are members of the Leadership Team; for example, the president, vice presidents, deans, vice provosts, the Jesuit rector, selected associate vice presidents, the head of University Mission, etc. These individuals are not necessarily the individuals enumerated in the Guidestar reports. Monnot asked about the members listed on the Guidestar reports. Hamrick said that, for example, the men’s basketball coach usually makes that list — but he is not an executive or key decision-maker. Hamrick added that, for certain Guidestar reports, the inclusion of School of Law faculty makes the list of salaries non-representative of executive compensation. He said that the key members are the managers of the university, with salaries remaining fairly constant over time (currently totaling roughly $3.4M per year). Hamrick said that the figures in the Guidestar report are not annualized properly. For example, if an executive joins the university one month before the end of a fiscal year, that executive’s year-to-year change in compensation will look inflated because it has not been annualized in the reporting. He cited another example that creates the opportunity for miscalculations — a dean moves into a Provost position and then later moves back to the faculty. He added that a cursory form 990 interpretation is further distorted by executives doing some overload teaching (like himself). Hamrick acknowledged that there can be periodic “equity adjustments” to executive compensation, and that these adjustments are based on an outside assessment and are approved by the Compensation Committee of the Board of Trustees. According to Hamrick, most executives see annual increases of 1-6% per year based on a merit-based evaluation. Hamrick suggested that PB invite Martha Peugh-Wade, head of Human Resources, if it desired a more detailed discussion about executive compensation at USF. Peugh-Wade is also resource personnel to the Compensation Committee of the Board of Trustees.

6. Brown asked about student-staff salaries decreasing as a percentage of compensation. Hamrick said that these have indeed decreased, as university offices struggle to find qualified workers and the high minimum wage in SF makes program assistants (OPE) or exempt staff relatively more attractive from a financial point of view. In some cases, students are also opting for higher-paying jobs off campus, etc.

7. Roddy asked about recent and upcoming construction on Lone Mountain and if donors will pay for it. Hamrick said that donor support is being sought for certain projects, e.g., the new planned dining facility on Lone Mountain and the new ROTC facility. Other projects, like the window replacement on Lone Mountain, will have to be funded by the University because they do not have great natural appeal to donors. He expects Star Route Farms to be eventually be paid for entirely through donor support; Development is working in good faith to make this happen.

8. Nikitenko asked what a comfortable operating margin would be for the University. Hamrick said 2% would be fine by him, provided that it is consistently generated. Our enrollment and discounting challenges have driven volatility in realized operating margins. Unexpected contingencies emerge to challenge operating results; Hamrick mentioned a 50% decline in enrollment in the Master of Science in Financial Analysis program. He thanked the MSEI program (i.e., Nikitenko) for recently helping to close the financial performance gap created by this unexpected shortfall.

9. Buccheri asked about the retirement agreement for tenured faculty. The timeline has already been shortened from multi-year agreements so that now, the University is only entertaining agreements for retirement in the current academic year. What other changes to the faculty early retirement situation can be anticipated?

Hamrick said that the provost and deans made the decision to shorten the timeline — to short-term retirement agreements, i.e., retirements to take place by May of the fiscal year. Hamrick said that money for retirement agreements is in next year’s budget but may not survive due to cuts that will need to be made. Garity asked about budgeted lines for part-time librarians who were laid off recently at the branch campuses. Hamrick mentioned that the head of the library, Tyrone Cannon, would have to decide whether or not to cut those lines or instead cut other budgets (e.g., the subscription budget). The library will see budget cuts for FY19, however. Sharifi asked about the vision for the branch campuses. Hamrick said that the branch campuses will be centers of graduate instruction and that the older CPS vision of adult degree completion programs is probably on its way out. There are now only two Bachelor of Science in Management (BSM) cohorts presently in operation. Running programs at branch campuses is a logistical challenge, Hamrick acknowledged, and it is a challenge to get deans and faculty excited about program launches in the regions. Monnot encouraged Hamrick to revisit this assumption; there may, Monnot said, be more faculty who are excited about launching programs in the regions than Hamrick realizes.

10. Nikitenko asked about the 1-year buyout for retiring faculty; Neaman asked how the budget for faculty early retirements is set. Hamrick said that the current budget to support the early retirement of faculty members is approximately $1M. It might be dropped from the FY19 operating budget as part of the budget-balancing process. Hamrick explained that if there are more early retirements approved by the Provost than expected in a given year, he works to reallocate resources across Academic Affairs to support the “extra” early retirements. This reallocation typically happens right at the close of the fiscal year.

We thanked Hamrick for his candid discussion with PB and excused him from the room.

B. Niles—Executive Board elections. Niles said that an election committee needs to be formed according to labor law. The aim is to maintain transparency. She proposed a committee based on Office of Labor Managemenåt Standards (OLMS; https://www.dol.gov/olms/) and to choose an online voting company. This is urgent, she explained. Niles suggested that 3 or 4 people may serve on the committee. Brown asked if this was a permanent subcommittee. Niles said that it is needed for EB elections (every 3 years). Ewert asked if it could be larger (yes). Agha volunteered Niles to chair.

Wibben asked about prior elections—was there not a committee (and guidelines) before? Niles said that this is new. Gabor brought up the issue of dividing the Humanities from the Arts inside of CAS. Neaman said that this should be addressed by the Bylaws Committee. Kidd said the mandate should include a process about recruitment—she volunteered to join the committee. Neaman asked Niles to send around requests to the general membership for additional members. Wibben asked if they should be PB only. Niles said that is preferred but due to time constraints, all members would be welcome. Garity volunteered to be on the committee.

Niles proposed the question. Kidd made the motion and Weiner seconded.
The motion was approved 21-0-0.

C. Sub-committee language. (1) Budget—Ewert questioned having the treasurer sit as the chair. Agha said that the mandate is to work on the proposed budget, so it makes sense to have the Treasurer as chair. Ewert asked about the power of the chair. Brown said he was in favor of having the treasurer as chair. Poole said that this was a good question to raise—checks and balances are made by the subcommittee. Neaman suggested adding language to allow other members to chair, not specifically EB.

Nosek asked what happens if no one volunteers? Neaman said that PB members are elected to do this service, but we could be open to non PB members serving. Ewert said that the treasurer represents the EB—they could bring recommendations to the EB. Poole asked about the past process. Neaman said that since 1975 the union has followed the practice of the founders to make decisions about spending as they come up. At the end of each fiscal year a professional audit is undertaken. There has never been a need to forecast spending, since most costs are fixed, and the ones that are not, are hard to predict. Up until now the financial reports looking back on the fiscal year have been sufficient, but there is no reason not to attempt a forward-looking budget. Buccheri said then the president and VP should be present for that reason, since they have the best idea of potential spending (cost of grievances etc). Wibben suggested including new items, such as the yearly CFT convention (sending delegates).

Due to time, further discussion of the subcommittee was tabled.

D. Wibben—Upcoming CFT Convention in March. Wibben said that we can send delegates (five per USFFA member = 20) to the annual CFT convention in Anaheim (http://cft.org/convention-2018) . She said that hotel reservations are due 28 Feb. so we need to move quickly. Wibben asked, is there an interest to go? How do we go about electing the delegates? The deadline for delegates is March 9th. Seven PB members expressed an interest in attending. Poole made a motion to fund up to 20 members. Neaman noted that the cost per attendee/delegate could be as high as 2k per delegate, that is 40k. After a discussion it was suggested this year to send only ten delegates. PB will send a call to the membership to gauge interest. Wibben volunteered to be the point person for booking hotel and assembling a list of attendees. Buccheri made a friendly amendment to Poole’s motion to send ten instead of twenty delegates The motion passed, 18-0-1.

The meeting was adjourned at 17:04 pm

Submitted by Julia Orri
USFFA-FT Secretary