Coordinating Board for Higher Education Meeting Minutes 08-06

Meeting Minutes
CBHE Annual Retreat
August 10, 2006
MDHE Offices
Jefferson City

Board members attending the meeting were:

Kathryn Swan, Chair
Martha Boswell
David Cole
Lowell C. Kruse
Jeanne Patterson
Gregory Upchurch

Introduction and Comments

Chair Kathryn Swan welcomed board members and MDHE staff to the retreat. Chair Swan introduced the newest CBHE board member, Mr. David Cole. Mr. Cole is an attorney in private practice at Cassville. Following brief introductions by board members and MDHE staff, Chair Swan provided a brief overview of the retreat agenda and outlined several goals for board members to achieve by the end of the meeting:

• Better understand the higher education funding model
• Determine strategies for upcoming legislative session
• Outline a framework for the process of strategic plan development

FY 2008 Budget Presentation and Overview

Ms. Donna Imhoff, Assistant Commissioner for Fiscal Affairs and Operations provided the board with a historical picture of higher education funding in Missouri since FY 2001, as well as a preliminary overview of the FY 2008 budget request. The presentation is included with the minutes as Attachment A.

Board members discussed at length the higher education funding model, which was developed during the FY 2007 budget. Board members expressed support for the intent of the model, which is to increase institutional transparency and accountability with respect to requests for new core decision items, provide a more accurate picture of the gap between state appropriations and institutional needs with respect to increases in mandatory expenses beyond the control of the institutions, and achieve desired strategic outcomes through the performance funding element of the model.

The funding model is also intended to reinforce that the Coordinating Board analyzes higher education funding requests with a system wide lens, making funding recommendations to the governor and General Assembly driven by statewide policy and system integrity rather than with an institution specific focus.

One element of the funding model, performance funding, has experienced past success in Missouri. From FY 1994 until FY 2001, public colleges and universities received over $66 million in funding to improve institution and student results in the areas of participation, performance, and success. Although the higher education budget request has continued to include an element for performance funding, because of the state's fiscal challenges, funding for performance has not been appropriated since FY 2001.

As the concept of performance funding is reintroduced, and the potential for receiving appropriations increases, it will be critical to build upon lessons learned by working with institutions to identify potential performance funding elements, incorporating state aligned elements (such as the goals related to the Mathematics, Engineering, Technology, and Science initiative), ensuring that performance funding is aligned with mission review, selecting a limited number of targeted elements, and determining baseline data and setting target goals for each element.

During the board discussion of performance funding, a timeline emerged that would allow MDHE staff to use the remainder of this summer and the fall of 2006 to move to a planning stage with institutions and state policy makers to select a small, targeted number of performance funding elements and to establish baseline data for those elements. A request for performance funds will be included in the FY 2008 higher education budget request; though it is unlikely funding will be available for the upcoming year. This will allow MDHE staff to analyze baseline data in 2007, with a target of FY 2009 for a return to performance funding. Board members were supportive of the timeline and framework for a sustained commitment to a meaningful funding stream based on a results driven approach, however, they expressed concerned about department staffing levels and the need for additional FTE to adequately support this and other initiatives, specifically mission review.

Discussion of CBHE Role Regarding Legislation and FY 2008 Capital Recommendation

Ms. Becky Brennecke, Legislative Liaison, provided the board with an update on legislative activities occurring this summer. Several board members, Commissioner McClain and Ms. Brennecke met with Rep. Carl Bearden on August 9, 2006 to discuss various higher education related issues. Rep. Bearden suggested that the board submit to him any thoughts they may have regarding potential higher education legislation for the upcoming legislative session. Rep. Bearden had several questions relating to the draft proposal for a single need-based financial aid program that has been developed by the state student financial assistance committee. MDHE staff will work with Rep. Bearden to answer his questions relating to the proposal.

Ms. Brennecke noted that on August 30, 2006 the Senate Interim Committee on the Cost of a College Education will hold its first hearing at the University of Missouri-St. Louis. Sen. Gary Nodler, chair of the committee, has asked that the Department of Higher Education give a presentation at the hearing.

Pre-filing of legislation begins on December 1, 2006. The board discussed higher education related legislation that may be filed early in December. Board members agreed that their attendance and possible participation at key hearings will be important during the upcoming session. Ms. Brennecke and the commissioner will provide as much advance notice as possible of hearings at which board member representation will be important.

Ms. Brennecke stated that over the last several years no funding recommendations have been made for higher education capital projects, although some funding has been appropriated for capital projects. These appropriations have resulted from individual institutions working directly with legislators to secure capital funding. Board members expressed concern that institutions continue to circumvent an established process, an approach that results in institution-specific focus rather than a system perspective.

The four-year public institutions and Linn State Technical College have recently finished submitting their FY 2008 capital priorities to the MDHE. Generally, most of the institutions' priorities are similar to last year's priorities with the scope of some of the projects changing and project costs increasing. Construction costs, in fact, have risen significantly for many of the projects, which is consistent with construction costs across the country. Institutions provided explanations and rationales for projects that have changed in scope, as well as increased construction costs associated with the projects. Board members will consider a prioritized FY 2008 capital project list during the October CBHE meeting.

During the Missouri Community College Association meeting on August 2, 2006, the community college presidents presented Chair Swan with a prioritized list of FY 2008 community college capital projects since FY 2003. Community college capital projects have not been recommended for funding by the Coordinating Board for Higher Education. The community college presidents indicated that this list is intended to inform board conversation and can be referred to if the board is asked about community college capital needs.

Various Updates

MOHELA

Dr. Jim Matchefts, Assistant Commissioner and General Counsel, provided the board with an update on issues related to the Missouri Higher Education Loan Authority (MOHELA). Commissioner McClain and Dr. Matchefts met with Mr. Ray Bayer, Executive Director of MOHELA on August 3, 2006. Mr. Bayer requested the meeting as a matter of introduction to Commissioner McClain since he is now a member of the MOHELA board. During the meeting, Commissioner McClain presented Mr. Bayer with a request for information relating to MOHELA personnel matters and contracts and agreements. Commissioner McClain received a response to the request on August 9 and is reviewing the information.

Mr. Bayer indicated that MOHELA continues to meet with governor's office staff to try to establish a mechanism by which MOHELA could transfer funds to the State of Missouri to be used for the benefit of projects outlined in the governor's Lewis and Clark Discovery Initiative. Some board members expressed concern that funds colleges and universities receive as a result of a transfer of MOHELA funds could be used to offset future increases in state appropriations.

CBHE members agreed that CBHE designee to the MOHELA board, Mr. Greg Upchurch should continue to articulate the CBHE position relating to the manner in which MOHELA funds would be used to benefit the state of Missouri. Some members believe some funding should be directed toward establishing a scholarship fund to provide ongoing awards aimed at improving access to higher education. In addition, the view was expressed that colleges and universities that have a relationship with MOHELA should be given priority consideration in funding for capital projects should MOHELA funds be utilized for this purpose.

Transfer and Articulation

Dr. Robert Stein, Associate Commissioner, provided the board with an update on the activities and initiatives of the CBHE Committee on Transfer and Articulation. After discussing transfer and articulation issues and best practices from other states, the board requested an opportunity, perhaps during the February 2007 Transfer and Articulation conference, to discuss the development of a state level placement policy.

Mathematics, Engineering, Technology, and Science (METS) Alliance

Dr. Stein updated the board on the work of the METS Alliance, appointed by the governor in early 2006, which is developing a P-20 action plan to address the crisis in METS education and economic development. Since the Math Science Summit in April, the Alliance has been working to complete this action plan and deliver it to the governor by August 31, 2006.

A data task force was also established by the governor in order to develop a linked P-20 data system that can be used to serve several purposes, including development of strategies and policies to address METS related issues. An action plan from the data task force is due to the governor by August 31 and will include a vision for a data center, process for integrating data to answer P-20 data questions, and how to use a P-20 integrated data system to support longitudinal analyses.

Update on P-20 Council

Senate Bill 580, sponsored by Sen. Charlie Shields and signed recently by Governor Blunt, creates a P-20 Council charged to work collaboratively to achieve P-20 policy goals. Members of the council are the commissioners of education and higher education, chairs of the State Board of Education and the Coordinating Board for Higher Education, and the Director of Economic Development. An initial meeting of the council was held in May with the next meeting scheduled for September 22, 2006.

Discussion of Orientation Program for New Board Members

Board members discussed the importance of providing orientation to newly appointed board members. Each new board member receives a packet of information relating to the board and department. Beyond introductory materials, it is also important for either the chair or the commissioner to make contact with the new appointee. Chair Swan also suggested a board mentor concept, whereby newly appointed members would work with a veteran board member during the first year of board membership to gain a better understanding of board membership and higher education issues.

Board members also discussed the need for new members to spend time at the department offices working with senior staff members, particularly to better understand the guaranty agency function of the department and the board's responsibilities with respect to the student loan program.

Chair Swan asked board members to send her any additional suggestions they have for the development of a board orientation program.

Review Proposed Bylaw Revision

As the CBHE bylaws are currently written, committee assignments are made by the CBHE chair at each regular June board meeting. Committee assignments made at the June board meeting can be problematic in some years because an outgoing chair may make the assignments, in addition to the fact that board members' terms typically expire on June 27 th , and therefore, new board members are not normally appointed prior to the June board meeting.

Dr. Matchefts presented a proposed revision to the CBHE bylaws that would address this potential problem by directing the CBHE chair to make committee assignments "promptly after" rather than "at" the regular June meeting.

As stipulated in the CBHE bylaws, any proposed amendment to the bylaws must be submitted in writing to the board at the regular meeting prior to the meeting when the amendment is to be acted upon. Thus, the proposed amendment will be on the agenda as an action item at the October board meeting.

CBHE Committees

Audit Committee Update

Dr. Matchefts reported on four audits that are currently in process at this time.

The following audits have been completed and are ready to be submitted to the CBHE Audit Committee and/or the full Board:

• Audit by BKD LLP of the financial statements of the DHE Student Loan Program for state fiscal year 2005 (report submitted June 2006)
• Audit by the Missouri State Auditor regarding the FAMOUS (Financial Aid for Missouri Undergraduate Students) system data confidentiality and security (report submitted April 2006)

The following audits are in progress but have not yet been completed:

• Audit by the Missouri State Auditor of higher education tuition levels, conducted as a follow-up to an audit on the same subject submitted in May 2003. The State Auditor issued a draft report on August 1, 2006 and the DHE's response is due August 14, 2006. This audit was initiated in June 2005.
• Audit by the Missouri State Auditor of the DHE's "management of tuition assistance programs". The DHE has provided information about state student financial assistance programs, as requested by the State Auditor, most recently in May 2006. The State Auditor's Office has indicated that it intends to visit 10 schools as part of this audit. The DHE has not heard anything recently regarding the status of this audit, and no date has been set for a draft report or an exit interview. This audit was initiated in June 2005.

Student Loan/Financial Aid Committee

Ms. Martha Boswell, Chair of the Student Loan/Financial Aid Committee, reported receiving an update and draft proposal to establish a single need-based state grant program from the State Student Financial Aid Committee. The State Student Financial Aid Committee is expected to have a recommendation relating to this proposal for the board to consider at the October CBHE meeting.

Strategic Planning Committee

CBHE members, led by Ms. Jeanne Patterson as chair of the CBHE strategic planning committee, discussed various approaches for the development of a new strategic plan. A key aspect of the discussion was whether the board should focus on crafting a strategic plan focused on internal board structure or on producing a comprehensive strategic plan for the state system of higher education. Board members agreed that one approach is not exclusive of the other. Implicit to strategic planning efforts is the ability for a plan to evolve, and grow in response to the changing dynamics of the organization it is built around. Ideally, a newly crafted, system-centered strategic plan would retain these characteristics, as well as become a plan with the ability to transcend the inevitable changes in administration and governance at the institution level as well as the state level.

During the June CBHE meeting, presidents and chancellors appeared eager to participate in a comprehensive, engaged strategic planning process at a system level that would be directed by the Coordinating Board.

Board members discussed a timeline for the planning process, target audiences for the plan, development and writing of the plan, costs associated with the planning process and a targeted public relations campaign that would coincide with the rollout of the strategic plan. Ms. Patterson agreed to draft a document based on the board discussion and work with Dr. Stein on the document. By October, board members intend to begin an engaged dialogue with key stakeholders regarding the state of higher education in Missouri and use the October CBHE meetings to continue this discussion. Board members will also utilize the time between now and the October board meeting to review best practices used by other states.

Goal Setting

Based on the discussion during the retreat, the board identified the following goals for Commissioner McClain to work toward during the next few months:

• Work with legislators between now and the beginning of the legislative session to promote the board and strengthen the board's position among key legislators.
• Formulate a structured message for communication with commissioner candidates that articulates the board's goals related to restoration of department staffing and funding, improved student accessibility, the importance of an interconnected P-20 system, and the critical nature of linked data systems with K-12 and economic development.
• Communicate on an ongoing basis with the governor's office. Demonstrate the need for increased funding and restored FTE for the MDHE. Attempt to secure consideration in the governor's FY 2008 budget recommendation for funding and FTE restoration for the department.
• Fulfill duties as a MOHELA board member.

Commissioner Search Process

Mr. Upchurch, Chair of the Commissioner Search Committee, provided the board with an update on the search process. An invitation for bid (IFB) for executive search consulting services was released to eight firms on August 1, 2006. Responses to the IFB are due by August 15, 2006 at 2:00 p.m.

Upon selection of a consultant, the search committee intends to circulate the commissioner profile developed during the last search process to various stakeholders. The search committee would like feedback from these stakeholders about their vision for the role of the commissioner of higher education. In addition, the search committee intends to visit with key legislators and the governor's senior staff to gain their thoughts on the commissioner's position.

Mr. Upchurch also discussed the committee's initial thoughts relating to the interview process in terms of arranging meetings or receptions with the final candidate(s) with legislators, presidents and chancellors of the colleges and universities, and the directors of the Department of Economic Development and the Department of Elementary and Secondary Education. The search committee is committed to identifying the most highly qualified candidates for the position, engaging in a thorough and inclusive interview process that results in the hiring of a commissioner by January 2007.

Other Items

Chair Swan shared with the board comments she received from community college presidents during a meeting of the Missouri Community College Association relating to the Presidential Advisory Committee. Chair Swan will work with Commissioner McClain to incorporate some of these suggestions into the planning for these committee meetings.

Chair Swan also shared with the board positive comments she had received from various individuals relating to the board's hiring of Commissioner McClain.

Adjournment

There being no further business to discuss the meeting adjourned at 4:55 p.m.

Respectfully submitted,

Brenda Miner
Executive Assistant to the Commissioner