Coordinating Board for Higher Education Meeting Minutes 02-04

The Coordinating Board for Higher Education met at 9:45 a.m. on Thursday, February 19, 2004 at the Truman State Office Building in Jefferson City. Members present were:

Sandra Kauffman, Chair
Lowell Kruse, Vice Chair
Dudley Grove, Secretary
John Bass
Marie Carmichael
Mary Joan Wood

Members absent from the meeting were:

Diana Bourisaw
Robert Langdon (departed at 12:00 noon)
Kathryn Swan

Others attending the meeting included:

Trudy Baker, Administrative Assistant (EPPIC)
Becky Brennecke, Legislative Liaison
Debra Cheshier, Director of Educational Policy, Planning, and Improvement Center (EPPIC)
Scott Giles, Director, Missouri Student Loan Group
Gina Hodge, Director, Information Technology
Donna Imhoff, Budget Analyst
Janelle Jaegers, Director of Administration
Joe Martin, Deputy Commissioner
Jim Matchefts, Assistant Commissioner and General Counsel
Brenda Miner, Executive Assistant to the Commissioner
Dan Peterson, Director, Financial Assistance and Outreach Group
Renee Riley, Public Information Specialist
Greg Sandbothe, Office Services Assistant
Robert Stein, Associate Commissioner, Academic Affairs
Laura Vedenhaupt, Administrative Assistant, Academic Affairs
Quentin Wilson, Commissioner of Higher Education
Leroy Wade, Director of Proprietary School Certification
John Wittstruck, Senior Research Associate (EPPIC)

Chair Kauffman called the meeting to order. A list of guests attending the meeting is included as Attachment A.

Minutes of the December 4, 2003 CBHE Meeting

Mrs. Wood moved that the minutes of the December 4 meeting be approved as printed. Mrs. Grove seconded the motion, and it passed unanimously.

On behalf of the CBHE, Chair Kauffman recognized Mr. Bass for his service and dedication on the CBHE Board. He has provided outstanding leadership on the Coordinating Board since 1996, during which time he served as Secretary of the Board for three years and as a faithful representative to the MOHELA Board. His commitment to higher education and to the families of Missouri students has been unwavering and invaluable. He has championed the underrepresented students of the state and has always offered a sound perspective on the issues. He is passionate about the need for quality teaching and learning opportunities, providing a strong voice for diverse representation on CBHE committees, commissions, and taskforces for which the Coordinating Board is extremely grateful. Chair Kauffman presented a token of the board's appreciation for his outstanding performance, his integrity, and his dedication to the state of Missouri and the Coordinating Board for Higher Education.

Mr. Bass stated that this has been an enriching experience - a journey. There is still much to do and a long way to go. Mr. Bass plans to continue his advocacy for higher education. He encouraged the Coordinating Board to continue their efforts to make Missouri's system of higher education one of the utmost quality, because Missourians are counting on the higher education community, and it is a matter of lifelong learning.

Report of the Commissioner

Commissioner Wilson thanked Mr. Bass for his service and his words of encouragement. The Coordinating Board and the Commission on the Future of Higher Education have come to understand through the efforts of Mr. Bass and others that higher education's greatest goal is to ensure successful participation in education for all. That is higher education's commitment in spite of the nearly 50 percent cuts to the administrative budget during the last three years.

The higher education community has worked with the legislature to increase the understanding of the impact higher education has on the state's economy. The Commissioner expressed his optimism that higher education funding can be maintained this year. The priority over the last year has been to develop a vision for higher education in the state with the Coordinating Board and the Commission working in concert with all stakeholders in establishing statewide priorities.

The shift to implementation began as the Coordinating Board provided focused direction to the Department of Higher Education (DHE) staff. Projects undertaken this past year include redesign of DHE's web site, the student loan guarantee processing system, and early awareness and outreach initiatives to make students in the seventh grade aware of what is required both financially and academically to attend college.

This year, DHE has been focused on four important, high impact activities:

• Value-Added Student Learning Project - Dr. Robert Stein has been working with institutional officials to find a method of measuring the contributions that individual institutions make to their students' learning. The National Report Card noted that this measurement has not occurred in any state. Missouri is a leader in assessment with many of its institutions leading nationally in efforts to assess the performance of students when they leave that institution.

  The RAND Corporation has provided much support to the department. Their pilot project was established on 13 campuses nationwide for two years. At the last meeting with representatives of four-year public institutions, independent colleges and universities, and community colleges, 28 institutions expressed interest in exploring further the potential of doing a Missouri pilot project.

• Institutional Quality - Some sessions were held last year with the Missouri Quality Workforce and the Higher Learning Commission that processes accreditation to discuss applications of quality to higher education. Northwest Missouri State University, Missouri Western State College, East Central College, and the University of Missouri-Rolla have adopted quality initiatives. It would be beneficial, if all institutions joined this effort, which is an integral part of discussions with the legislature concerning performance in higher education. Higher education needs to demonstrate that, with its present funding, it is effective and efficient and that additional funding would provide a return on the investment in terms of benefits to the state.
• Financial Literacy - The DHE guaranteed nearly $700 million in student loans last year. The real issue is to make sure that the reduction of public aid to education and the rising tuitions will not cause students to incur excessive debt. DHE wants to ensure that students understand the process and the obligation of their loans.
• Grants and Scholarship Delivery Process - This project, relating to restructuring financial aid, has been chartered and team membership will be established in the coming weeks. Commissioner Wilson expressed appreciation to the institutions and other organizations that have been involved in the chartering sessions.

The Commissioner expressed appreciation to Mr. Joe Martin for his efforts and the close relationship established with the governor's office, the legislature, and others as staff has tried to explain the role of the CBHE in evaluating legislative issues and initiatives which have not gone through the budget process.

The department's completion of a strategic plan will identify some issues not yet discussed, but which require the attention of the Coordinating Board and DHE staff. The department's top priority this year is to shift from policy development to assist the Coordinating Board, by understanding and implementing their direction.

Senior staff will be completing performance reviews, known as the 360 degree evaluation and planning process. Staff is trying to hire four people in the marketing area to handle the student loan program and respond to the needs of the institutions, especially as MOHELA expands its borrower benefits. Academic affairs is also in the midst of searches to fill two research associate positions. Dr. Cleo Sumudzi accepted a position at Northwest Missouri State University Academy and Dr. Nancy Devino accepted a position with Apex Learning Inc., Bellvue, Washington.

Report of the CBHE Presidential Advisory Committee

Dr. Henry Shannon, chancellor, St. Louis Community College, thanked Mr. Bass for giving his time and energy to all the higher education initiatives in the state as well as in the St. Louis area. Dr. Shannon summarized the discussion that took place at the Presidential Advisory Committee

.On behalf of the presidents and chancellors, and their designees, Dr. Shannon expressed appreciation for the time to converse with the Coordinating Board about substantive issues, and supported Chair Kauffman's suggestion of changing the format of the Presidential Advisory Committee meeting to involve more qualitative discussions of the type that transpired on February 18 at the Hampton Inn in Jefferson City.

FY 2005 Budget Update

Mr. Martin explained that the FY 2005 budget recommendations provided by the governor contained minor core reductions to higher education's administrative budget, provided a state employee pay plan for all employees, and included an additional $41 million to be distributed to institutions. These additional funds would come from cuts in the state budget or come in the form of new revenue from approximately $520 million that was contained in the governor's proposal.

The House introduced version of HB 3, filed in the House by Representative Bearden, contains his recommendations for funding higher education. Those recommendations present a 10 percent reduction of the governor's recommended core administrative expense and equipment (E&E) appropriations, remove the governor's recommendation of an additional $41 million to the institutions, and recommend funding those institutions at the current FY 2004 levels. This bill reduces the expense and equipment appropriation by $10,000, an amount allocated to the DHE by the Office of Administration for operation of the Office of Administration in Washington D.C. If this bill is adopted, it would result in a nearly 57 percent reduction in the department's core expense and equipment budget over the next 3 years.

DHE staff will be speaking with the House Appropriations Committee members when they reconvene to work on higher education's budget. Staff will request members to reconsider and hopefully find additional funding for the institutions.

Chair Kauffman asked the Coordinating Board to discuss the role of the CBHE in this situation. She stated that if the Coordinating Board is going to move forward with weighing in on issues that are before the General Assembly, this is the perfect time for the board to speak on behalf of postsecondary education. The legislature should know that the Coordinating Board for Higher Education supports pursuing the $41 million, and not losing any additional money for administration. The Coordinating Board responded with the following comments:

• Mrs. Carmichael stated that it is not equitable for higher education to take the same 10 percent across the board cut given to all agencies in light of the larger cuts to higher education in the past. She recommended sending a letter from Chair Kauffman to legislative leadership and to the appropriate committees requesting them to reconsider.
• If the legislature wants a Coordinating Board, then they need to fund a Coordinating Board. It is critical they understand that higher education cannot function and provide what the state needs, nor accomplish what the statutes dictate of the CBHE without adequate funding in planning for its future with all the activities entailed.
• Mr. Bass stated that education is an industry and jobs are being lost in this industry. It will affect and damage the JOBS NOW program and the economic development of this state to attack this industry or its institutions that are promoting economic growth for Missouri.
• Mrs. Wood stated that the legislature continually expects more from the department and requires it to function with less money. That is not reasonable and she asked Mr. Martin to communicate in the best possible way to secure the funds needed for higher education.
• Mr. Kruse stated that a tremendous investment has been devoted to the Commission on the Future of Higher Education and it is necessary to have the resources to proceed with developing the intentions of their plan, in addition to meeting higher education's fiduciary responsibilities.
• Mrs. Grove referred to access and participation, stating that in her conversations with individual leaders of the institutions, she was told that people are asking for more courses at institutions, that classes are overcrowded, and that students want courses that cannot be provided because funding is not available for those courses. The additional $41 million in funding would allow institutions to provide better access and encourage participation by the students that need to be educated in this state.

Chair Kauffman charged Mr. Martin to prepare a draft recommendation communicating the Coordinating Board's thoughts regarding the FY 2005 budget recommendations.

Proposed CBHE Policy Related to the Review of Legislative and Institutional Proposals

Commissioner Wilson presented proposed CBHE policy related to the review of legislative and institutional proposals - Tab B. Several issues dictating this proposal are:

• The Coordinating Board has a structured process for considering state proposals during the budget process, with limited resources to evaluate projects that arise during or between legislative sessions.
• The policy and view of the Coordinating Board about its role during that process in which they have statutory requirements to develop, in maintaining forward progress, in their mission to advance higher education.
• There should be established guidelines for the evaluation of institutional proposals or legislative proposals that arise. The priorities that the Coordinating Board established for the system of higher education - preparation, participation, performance and implementation form the criteria. Some examples may include:
  • It would be difficult to quantify reductions to general revenue that require it to subsidize other functions, affecting both preK-12 and higher education and producing a negative impact on funding for higher education. Likewise, the transportation diversion issue, allowing general revenue funds to provide functions now paid from transportation funds, would negatively impact higher education.
  • The percentage of employer and workforce needs that are met; and
  • The increased economic benefit of higher education in the areas of research, technology, commercialization, and construction.
• Department staff suggests seeking information based on the criteria developed by the institutions or the legislative advocates to expedite the evaluation process.
• How active and involved does the Coordinating Board wish to be in its statutory role?

Commissioner Wilson stated that in the past the Coordinating Board has been reactive, not proactive on some of the issues. The Coordinating Board reviews and makes recommendations on capital projects during the budget process, but staff wants to determine if the board wants to provide more evaluation during the budget process. Proposals that come in during the legislative session are not reevaluated. This proposal is an expansion of the Coordinating Board's involvement in the legislative process, but not beyond what is statutorily authorized. It is legitimate for proposals to be evaluated in light of the CBHE's priority goals. The next step that may require legislative activity is whether the Coordinating Board should propose initiatives instead of evaluating them and providing guidance as was done traditionally. Department staff is suggesting that the Coordinating Board offer at least an analysis of relevant issues and review them before they become final.

Mr. Kruse stated that if the board needed to clarify this issue, have a written policy, and follow-up with a letter, the department needs to be staffed so the Coordinating Board can provide reasonable input.

Mrs. Grove stated that from her review of the survey on Alignment of Educational Priorities and Policy Recommendations, she expected it to include a statement on the impact of those priorities on the structure and funding of the Missouri system of higher education, as well as on access, excellence, performance, etc. A structure for higher education in Missouri is in place. The CBHE is responsible for the overall coordination and planning for the state, and as such, structure and funding come under the purview of the CBHE, which should be part of this recommendation.

Commissioner Wilson stated that a restructuring of the system of higher education was not recommended, but it might affect the relative standing of institutions. Would it create a new tier of institutions or create an imbalance in the institutional structure? The ultimate responsibility of the Coordinating Board is how the proposals affect the priority results.

Chair Kauffman noted that action on this agenda item would not be taken today. It will move forward with the department looking at legislative proposals and budget proposals based on these general guidelines at this time. The policy guidelines are in place, but the policy itself requires further development.

Commissioner Wilson stated that the lack of a motion would not inhibit the staff's discussions with the legislature. Staff is prepared to convey that the Coordinating Board has given their authority to proceed in this direction, as a responsibility to the institutions that are trying to advance their institutional missions, and as a responsibility to provide presidents and chancellors with some reaction this year. Commissioner Wilson added that this proposal provides another means to secure higher education funding. Since the budget crisis, higher education has become more proactive. This is a process for staff and the CBHE to become more involved between the annual processes that have been established.

The board responded with the following comments:

• Invite the legislators to a session to discuss the role of the Coordinating Board in supporting them and in defining a future for higher education in this state.
• The Coordinating Board should have a role in relation to issues that are important to higher education.
• Legislators have to want and value input from the Coordinating Board.
• Clarification on what the Coordinating Board should accomplish, combined with the utilization of the recommendations of the Commission on the Future of Higher Education report.
• This proposal provides direction to the department for the remainder of this legislative session. The department has the right to become actively involved as long as policies, supported by the CBHE, are in place.

Mrs. Carmichael asked if the Coordinating Board, in its role during the proposal evaluation process, would have an opportunity to react prior to acting on proposals. Commissioner Wilson expects a definite delineation of the Coordinating Board as the policymakers and department staff as the implementers to develop within a few months. Staff would perform an evaluation with the institution or the proponent, perhaps requiring the institution to provide information or answers. Upon an evaluation of that data, staff would develop a recommendation to present to the Coordinating Board.

Chair Kauffman stated that without objections, the Coordinating Board for Higher Education authorizes the department to move forward with this policy.

Update on the University of Missouri and Northwest Missouri State University Merger Proposal

Chair Kauffman stated that it was important for the department and the Coordinating Board for Higher Education to continue the dialogue begun last April with Dr. Elson Floyd, president, University of Missouri System and Dr. Dean Hubbard, president, Northwest Missouri State University, regarding the proposed merger. This ongoing conversation will help insure the board has adequate information in determining whether or not the merger is in the best interest of postsecondary education.

Dr. Floyd thanked Chair Kauffman for inviting them and for the privilege of providing an update to the Coordinating Board. Thoughtful discussions about having Northwest Missouri State University become part of the University of Missouri began in April 2003 at the CBHE meeting at Truman State University, and were announced publicly at that time. Transition teams began talks at Northwest. The Board of Curators and the Board of Regents gave their approval to continue those conversations.

In August, Dr. Floyd made several trips to Maryville to discuss with the various constituencies the meaning of having the two institutions form this kind of partnership. Discussions continued into the fall. In January 2004, a Memorandum of Understanding, authorized by the Board of Curators and by the Board of Regents, was considered. In February 2004, the Memorandum of Understanding was again consummated and the two respective boards had a resolution transmitted to the governor and to the General Assembly to consider legislation to have Northwest become part of the University of Missouri System. The two presidents met with virtually every audience and nearly every constituency about this proposed partnership. If they are able to receive authorization from the General Assembly, followed by concurrence of the governor, it will be the first time that two public universities in this country, without a mandate from the governor, the legislature, the federal government, or a financial exigency, voluntarily join together because it is fundamentally right.

Dr. Hubbard presented some background information on the merger, included in the minutes as Attachment B. Dr. Hubbard delivered to the Northwest Board of Regents, before they approved the Memorandum of Understanding on February 7, in remarks he provided considerable detail on their four decision drivers:

• Student success
• Satisfaction (student, faculty, and staff)
• Financial viability for robustness
• Enrollment

At a weekend retreat with their board, they examined nearly 100 trends, including economic, demographic, political, legal, social, technological, and competitive trends and performed an analysis to examine the strengths, weaknesses, opportunities and threats if Northwest were part of the UM System compared to Northwest being independent of the system. The conclusions are summarized in the document Dr. Hubbard distributed to the Coordinating Board for Higher Education.

Mr. Bass asked if Northwest would abandon their five-year strategic plan or if there would be continuity between the five-year plan and the merger with the University of Missouri System. Dr. Hubbard explained that in their annual planning cycle, they used the state plan. One of the major focuses of that plan has been on strengthening higher education's role in economic development. Looking at the census of the 17 counties north of Kansas City, comparing 1900 and 2000, the population has declined by 39 percent, or a loss of 4 out of 10 people. One of the variables is the accelerating population loss in that region. Another variable linked to that is economic development and finding a way to turn that trend around.

Dr. Floyd added that at the December meeting of the Board of Curators, the University augmented its role, mission, responsibilities, and obligations to all Missourians in the state by adding to the centrality of what economic development does, along with research, teaching, service, and other creative activities.

Mrs. Carmichael stated that the local benefits to the northwest region are obvious, but wondered what costs are associated with those benefits in terms of administrative costs for either or both universities. Dr. Hubbard noted that the net savings per year will be just under $1.1 million, which results in reduced specialty insurance, American Express fees, two buyer positions, a treasurer's position, etc. They have carefully analyzed what services are provided by this system that can be utilized without adding cost to the system. Northwest Missouri State University and University of Missouri System will be more efficient. Northwest will add about 10 to 11 percent to the enrollment base at the University of Missouri.

The only unavoidable expense is the cost of adding Northwest employees to the University of Missouri retirement system. At most, the University of Missouri System will have to add $5 million, over a 20 year period, to cover the employees of Northwest, assuming all existing employees choose to transfer from MOSERS into the University System. The more probable figure would be half that amount over 20 years to service additional retirees, except those who plan to retire at 80 and out.

Mrs. Carmichael wanted to know if the University of Missouri System would realize a net reduction in expenses in assuming another institution. Dr. Floyd stated that there would be some responsibilities which can be handled as part of the University of Missouri System. It allows the University of Missouri System and the state generally to realize a greater return on the investments that have already been made in these two institutions. The only presence that the University of Missouri has north of the river is through their Outreach and Extension division. If additional active academic and economic issues can be brought to the northern part of the state, that is value added to the investment that will be made there. It is important to do whatever can be done to promote access and opportunity for students of Missouri. This merger clearly promotes access and opportunity.

Mrs. Carmichael stated that when higher education went through the mission review and enhancement process, Northwest adopted the mission of becoming the technology institution, developing the modular coursework delivered over the Internet. It is important that citizens have access to higher education through coursework and programs as the economy changes. She thinks that these Internet-based programs have not been developed to serve the citizens of the state.

Dr. Hubbard stated that the Memorandum of Understanding was designed specifically to avoid distortion of the mission, the unique character of the institution, its emphasis on quality, and its integration of technology into the educational programs. Northwest has experienced enormous growth in on-line instruction and those related activities will not be abated. The mission is committed to preparing students for a world of constant change applying information technology to improve learning processes and promoting continuous quality improvement to enhance performance.

Mr. Bass asked for a profile of Northwest's current student population. Dr. Hubbard stated that Northwest serves traditional students who have graduated from high school and come to Northwest to live on-campus. These are students who are studying full-time. Forty-eight percent of them are first generation college students. Their average ACT score is slightly above the national average and in accord with Northwest's moderately selective admission standards.

Early in the discussions, it was important to know how Northwest would fit into the University of Missouri System. It was determined that Northwest ranked in the middle on nearly all issues analyzed. Their students fit into the mix. Northwest does not anticipate any radical changes in admission standards or the students it accepts, because the Memorandum of Understanding focuses on student success.

Mrs. Wood wanted to know if Northwest would change their selectivity. Dr. Hubbard stated that student enrollment at Northwest including tuition, admission standards that measure levels of student success and other terms and conditions for attendance shall be in accordance with policies, rules, and regulations of the University of Missouri System. Tuition for enrollment at Northwest will not be automatically raised to equal that at other campuses within the system.

The best predictor of student graduation rates is entry level characteristics. Northwest has accomplished this for numerous years and improved every year, establishing them ahead of their peer group nationally with a current success rate of 70 percent. During the transition that just occurred, over 90 percent of the freshman returned for the second semester.

Mrs. Wood stated that she has admired Dr Hubbard for being diligent with the efficiency and quality of Northwest, but wanted to know how the merger would impact the balance of power in the legislature. Dr. Hubbard stated that the University of Missouri System did not try to build an empire. He approached Dr. Floyd first. Those who strive for quality know that one of the most dangerous paths one can travel is to seek to preserve equilibrium, because improvement is by definition, disruptive of equilibrium. In decision-making, if the goal is equilibrium, the best that one can hope to achieve is an amiable mediocrity. The relevance of Northwest and University of Missouri System is not only as individual institutions, but as a collection of institutions bound together in their willingness to make changes.

Dr. Floyd stated that the University of Missouri understands these things, as the state's public research university with a land-grant obligation and responsibility. He understands the importance of accountability and that the University of Missouri has multiple constituencies to which it is accountable. This will not change fundamentally. Discussions will begin on how these two institutions can serve northwest Missouri in ways that were previously not possible. The stewardship that the University of Missouri must exercise will continue.

Mrs. Grove stated that the changes being made will impact how education is delivered in Missouri in the future. She was concerned about the students that will not have access or opportunity because of the changes from the merger. She wanted to know if Dr. Hubbard's real creativity, leadership, student success, his excellence, or himself would be lost. She wanted to know how Dr. Floyd could take advantage of the incredible offerings of Northwest and spread them around to other institutions.

When thinking about education in the future, she sees the increasing presence of the University of Phoenix and other institutions providing technology-delivered courses, degrees, and programs in Missouri and across the country. Is this the most creative way for education to be delivered in the future? Will it deliver education differently so that as many students as possible will be educated to the highest degree in the least cost-effective way? How will obtaining an education be different as a system without asking for additional funding? Higher education needs more money, more degrees, more professors, and more buildings. How will education change and improve in the future?

Dr. Floyd stated that this partnership is an example of doing business in a fundamentally different way by ensuring that the resources are available and will be deployed appropriately to both institutions. If $1.1 million can be saved from administrative costs, distributed into the instructional and research mission of the institution, that is fundamentally a different method. With Northwest Missouri State University being a part of the University of Missouri System, courses can be beamed to Northwest, without having a professor on campus or having a comprehensive system of delivery, which is another fundamentally different approach to delivery. This will have a huge impact on graduate and undergraduate education in the future. Dr. Floyd does not intend to preclude access, because it is important that Missourians understand the nature of institutions and know the opportunities available to them.

Both presidents have been mindful of pricing policies associated with this possible inclusion of Northwest. They will not make any abrupt changes in the tuition merely because of entry into the University of Missouri System and intend to keep the Board of Regents as a reconstituted Board of Trustees, because of the invaluable counsel they provide Northwest now, but will also provide both institutions.

All of the core values and principles associated with both institutions throughout the state will continue to be preserved under this new paradigm if authorization from the General Assembly is obtained. Hopefully it will allow both institutions to operate in a more efficient way, which must also be considered, due to declining financial resources. Higher education in Missouri must still remain as competitive as possible in the national, global economy of which it is a part.

Mrs. Carmichael asked if there would be pressures from other campuses in the University of Missouri System, whose students are paying significantly higher tuition, to raise the tuition at Northwest so that they can share the burden of the costs of higher education for the system.

Dr. Floyd reiterated that they would not arbitrarily change the tuition at Northwest to match the tuition levels of other campuses of the University of Missouri System. They have looked at the resource allocations within the University of Missouri System and are in the preliminary stages of conversation with the campuses and the Board of Curators regarding tuition differentials. Tuition differences could be a different approach for the University of Missouri as an institution. There are different needs and requirements associated with the campuses in the University of Missouri System. From a budget perspective, having one tuition may not be appropriate.

Mr. Kruse stated that he and Dr. Hubbard had worked together a long time with the dilemma of population loss and with economic vitality. Dr. Hubbard's figures describe a substantial loss of population. All conversations over the years have concluded that education is absolutely crucial for revitalization in northwest Missouri.

Mr. Kruse strongly supports the Commission on the Future of Higher Education's issue of participation and alignment of regional public two- and four-year institutions into formal partnerships to respond collaboratively to regional needs. Regional collaboration is extremely important in the future of this state. He asked how this partnership improves ability to work with other institutions of higher learning in northwest Missouri. K-12 and pre-K are extremely important to the future of the northwest area and he wanted to see the commitment to that regional collaboration to ensure this partnership brings tremendous added energy to what can be done with Northwest, Missouri Western, North Central, and other institutions.

Dr. Hubbard responded that being an engine for economic development or meeting the educational needs of the region better demands collaboration. Over the years he has worked with the University of Missouri System to develop regional cooperative arrangements. Dr. Richard Wallace, chancellor, University of Missouri-Columbia and Dr. Hubbard drafted the charge and the goals for the Northwest Missouri Educational Consortium, which includes North Central Missouri College, Missouri Western State College, Northwest, the University of Missouri System, and all vocational and technical schools. They collaborated to offer graduate programs without duplication. That will not disappear.

In approaching education differently, Dr. Floyd stated that there are two ways to offer graduate level programs. One can either hire all the faculty necessary, which is expensive or adopt a different model that is possible through technology, whereby Northwest is responsible for content of the curriculum, the qualifications of instructors, locating those instructors, entrance into the program, assessment of performance, but would not attempt to staff it. This is the model they envision. The credit for this model must be given to Dr. Steve Lehmkuhle, vice president for academic affairs, University of Missouri System. Another part of this is the idea of using mixed modes of delivery, not delivering everything in a sequence even within a single course. Some of it can be done through on-line, asynchronies, etc. Nearly 70 percent of the courses on their campuses now involve those components.

Another issue is to become part of a large organization and preserve agility. In the beginning, Dr. Floyd and Dr. Hubbard agreed to sort out the issues and find those that would require research, legalities, other services, and to identify any obstacles. Dr. Hubbard spent a week at 3M Corporation in Minneapolis last summer to try to understand what combination of policies, procedures, culture, etc. combine to maintain and sustain the atmosphere of the most innovative company in the world. A group comprised of UM administrators and corporate executives from across the country came to Northwest. The 15 points in the Memorandum of Understanding originated from that discussion. Looking at the demographic trends 10 to 15 years in the future and not doing anything was not an acceptable scenario to their Board of Regents and Board of Curators.

Dr. Floyd stated that they tried to develop a framework, a value system that would lead them in making the decisions in the future to outperform and under-promise due to ever-present change.

Higher Education Related Activities with Other Organizations
Missouri Higher Education Loan Authority
Michael Cummins, Executive Director and CEO

Before recessing for lunch, Chair Kauffman introduced Mike Cummins, executive director of MOHELA. Mr. Cummins introduced Mr. John Greer, chairman of the MOHELA Board and staff members Ms. Suzy Crump, who manages human resources at MOHELA; and Ms. Karla Albert, who manages the marketing department at MOHELA.

Mr. Cummins stated that MOHELA is collaborating with the Department of Higher Education on several innovative and exciting initiatives and they are in the wake of the challenge of the Commissioner's Report on Higher Education. MOHELA is committed to helping Missouri and the state system of higher education. He commended Commissioner Wilson's outstanding staff and looks forward to the continued strong relationship with DHE.

Chair Kauffman asked Dr. Floyd and Dr. Hubbard if they would be willing to continue the merger discussion following a brief lunch recess. Both presidents agreed to return when the board reconvened following lunch.

Mr. Bass was concerned about the problem of inequity in the distribution of funding to the University of Missouri-St. Louis and whether that would cause a problem among other campuses or legislative debates, and what commitments had been made to bring equity to campuses, if it was determined that allotments were different. Dr. Floyd was aware of the problem and testified before the Senate, as well as the House, that the University System would try to rectify the situation at the University of Missouri-St. Louis.

All campuses across the country are suffering from some level of inequity as well as in the mid-west. Improvement is needed in all institutions in Missouri. Some adjustments were made in the first withholdings when Dr. Floyd arrived at the university as an expression of his willingness to resolve the problem. He is now working with his senior leadership team to get additional funding for the University of Missouri-St. Louis. They have begun a thoughtful process, known as Resource Allocation Principles, to examine how resources are allocated among the campuses. It would be great to have Northwest Missouri State University become part of the University system before that policy is finalized. He wants Dr. Hubbard and his colleagues to be fully informed of the allocation changes and modifications so all campuses will be a part of the final resolution. They hope that the entire budget dedicated to Northwest will continue to come to the University of Missouri System, but will immediately go to them in the same dollar amount that they have currently.

Mr. Kruse asked Dr. Floyd to describe the regional strategy taking place with Missouri Western State College, North Central Missouri College involving the economic issues in northwest Missouri and the role that Northwest Missouri State University would play. Dr. Floyd stated he had significant experience with institutions engaged in the communities of which they are a part, and believes it is right from institutional and public policy standpoints.

Dr. Floyd believes that institutions, especially research institutions, need to look inward, to be honed in to regional or local issues. He wants the communities that are a part of the University of Missouri System to come to the system for solutions to some of the problems that they are dealing with, either through outreach and extension or individually by campus. The public institutions are definitely in a serious crisis at this time. He wants the institutions to seek solutions to their problems and serve as economic drivers in their communities. If we are successful locally, it will rebound to benefit Missouri nationally and globally.

There is a substantial difference between the roles of a Northwest Missouri State University in Maryville versus a University of Missouri-Kansas City or St. Louis campus, because the Maryville community refers to the region. Dr. Floyd wants to assure the continuation of the regional work and improved collaboration that Dr. Hubbard has achieved among the three institutions in the northwest and all other institutions interested in leading northwest Missouri. Dr. Floyd does not want it jeopardized, but improved substantially.

Dr. Floyd intends to focus on the community that is immediately involved and then systematically branch out in the broader concept of community engagement. The continued engagement of a Board of Regents at Northwest is necessary as they provide huge value associated with the present relationship and their advice and counsel will be invaluable as the merger goes forward.

Chair Kauffman asked if intensive collaboration would achieve their goals rather than through a merger. The decisions that are being made, in respect to the merger, affect four current campuses in the University of Missouri System, and adding a fifth campus would affect all of postsecondary education in the state. Dr. Hubbard responded that there is a difference between collaboration, being on the outside, and being part of the family, responding to needs as a system. Collaboration has limits. Northwest receives some federal funding for improving math instruction in middle school, but restricts access to biotechnology grants.

Dr. Floyd noted that as a consequence of outreach and extension, the University system has a presence in, and a responsibility of serving every county within the state.

Mrs. Grove stated that because of the size of the system with the five campuses, and the size of the student body, that delivery services may be handled differently. She wanted to know if other entities, groups, or individuals in the state will be able to take advantage of Dr. Hubbard's learning, expertise, or programs. Dr. Floyd referred to the longstanding relationship with Northwest as a valued partnership, stating that there are similar relationships with other institutions in the state. The University of Missouri System will continue the collaborative programs and opportunities. Dr. Lehmkuhle did a marvelous job on behalf of the citizens of the state and serves as the principle architect for these collaborative partnerships.

Dr. Hubbard stated that, with the technology and the delivery across the five campuses, education would be more accessible to other people across the state. Northwest Missouri State University offers several complete degree programs including a master's program, but as a system it affords more opportunities to combine courses, eliminating one institution developing the whole program. Northwest originally partnered with 40 different community colleges, faculties agreed on curriculum and assessment, and they promised students that if they completed the first two years at the community college, they could transition to Northwest seamlessly via the internet.

Campuses will not disappear because they serve a social and educational function. Not minimizing the value of the classroom, it is said that 50 percent of the learning that contributes to success in life is learned outside the classroom. All institutions offer some small upper division courses to service someone in need of that degree, but not efficiently. The logistics of providing this service from outside the group/system is quite different and difficult, regardless of all the collaboration.

Dr. Floyd stated that there was no hidden strategy to pursue other campuses as part of the University of Missouri System, and if pursued by other campuses, each case would be evaluated individually.

Chair Kauffman wanted to know what impact Northwest Missouri State University, operating under the Baldrige Quality Criteria, would have on the four institutions currently in the University of Missouri System; and if it would be an early initiative undertaken if a merger occurred. Dr. Floyd does not intend to destroy the culture and traditions that are a part of Northwest, but each campus within the University of Missouri System has to establish its own culture and traditions. He has allowed chancellors and leadership on the campuses to define their campus operations, not imposing those values throughout the system. The UM System intends to be as efficient and accountable as possible and those values will permeate each of their universities. It is important to expose the other campuses to it, but allow them to ultimately decide.

Chair Kauffman asked if Dr. Floyd and Dr. Hubbard would take that culture and determine how it could be applied to other campuses in the system to make them stronger. Dr. Hubbard stated that he never comments on how someone should manage their shop as that choice should be their decision.

Commissioner Wilson wanted to know Dr. Floyd's reaction to the potential value of the Baldrige Quality Criteria, as leader of the University of Missouri System. Dr. Floyd stated that this culture of quality at Northwest should exist at all universities nationwide. The academy is examining demonstrated best practices. Dr. Hubbard and his colleagues have demonstrated some of those best practices and other institutions want to adopt some associated aspects, but that will be their campus decision.

Chair Kauffman expressed appreciation to Dr. Floyd and Dr. Hubbard for sharing dialogue and hoped representatives from other institutions benefited, because all postsecondary education is effected. Taking chances or a new direction is very important, and requires the Coordinating Board to consider all postsecondary institutions as they move forward.

Dr. Floyd asked what decision the Coordinating Board for Higher Education is charged with making and how could he and Dr. Hubbard help the Coordinating Board to arrive at their decision. Chair Kauffman stated that the Coordinating Board has a role in this merger in presenting what they believe to be the strengths and the weaknesses of a merger and how it effects all postsecondary education in the state. They need to know how it complements their goals and state priorities. She has become increasingly concerned that the Coordinating Board weigh in on moving forward with a merger, because it is in the best interest of postsecondary education.

Chair Kauffman wanted to know if the University of Missouri System fit into those priorities and goals better with a merger or without a merger. Dr. Floyd stated that the goals of the Coordinating Board were clear and he saw no consequences of the merger conflicting with CBHE's goals. One of the most significant goals is to increase the participation rate, access, and affordability. Those have been guiding principles associated with having institutions come together.

Chair Kauffman questioned the affordability for northwest Missouri as that is an important issue in that area. If tuition increases in the next few years, will those students have more or less access? Dr. Floyd stated that they have worked through the affordability issues, which have been enumerated in the context of the Memorandum of Understanding. They have been mindful of the leadership provided by the Board of Regents and want to continue to rely on those citizens to help form the policy as they move forward. As a state, higher education needs to obtain more participation. This relationship will broaden the academic courses that will be delivered in conjunction with Northwest Missouri State University. This is a fundamental driver associated with access. They will not price themselves out of higher education. Dr. Floyd looks forward to further discussions of these issues and thanked the Coordinating Board for their time and attention.

Higher Education Related Activities with Other Organizations
Department of Economic Development
Kelvin Simmons, Director

Chair Kauffman introduced Mr. Kelvin Simmons, director, Missouri Department of Economic Development. Mr. Simmons congratulated Mr. Bass for his contributions to higher education throughout his public career.

Mr. Simmons stated it was a pleasure to hear the instructive discussion of the Department of Economic Development and the Department of Higher Education merging in ways to prepare for the future of this state. Mr. Simmons and his predecessor, Mr. Joe Driskill, continue searching for opportunities in which the two departments can partner. There are roles for both departments in the recently created JOBS NOW program by Governor Holden. There is a strong business climate in Missouri.

The unemployment rate in the state has been consistently below the national average. Personal income of Missourians continues to grow faster than the national average. There has been some loss of manufacturing in Missouri and throughout the country as it has been directed overseas. However, it presently seems stabilized. Between January and December 2003, Missouri added 27,000 net new jobs while the nation lost about 232,000 jobs. Missouri's job growth is the eighth highest in the country and higher than all eight states bordering Missouri.

Missouri's economic trends are good and this momentum needs to be explored in relation to job creation. Mr. Simmon's primary goal is to locate opportunities to create high paying jobs in Missouri through industry clusters, such as advanced manufacturing, life sciences, and technology, which is the wave of the future for this state.

The JOBS NOW Program described in SB 1234, sponsored by Senator Mathewson and Senator Childers, involves the infrastructure portion of the program. It is basically comprised of three components, of which 60 percent is for Missouri towns, cities, and communities to utilize for infrastructure-related programs, which many communities are incapable of starting or completing without an infusion of capital. This allows those entities to leverage other opportunities with the federal government, and the state of Missouri.

The JOBS NOW Program is cost-neutral because it provides the opportunity to take three existing tax credit programs that are underachieving at this time and place that money into a jobs fund that can then be underwritten with a bond issue in the amount of $152 to $200 million. It will be produced with the $10 to $15 million that is utilized by those tax credit programs on an annual basis, over a ten year period. The Missouri Development Finance Board would have ultimate control related to the actual applications received and dispersed. Low interest loans and grants will be made available to those communities who have infrastructure-related needs.

Another portion of the program, relating to colleges and universities, involves the Life Science Research Districts. There are currently 12 districts in the state, which enable businesses and universities to create their district, suitable to their area's needs, through business, universities, research, wet labs, etc. Taking the increments from those particular districts and putting them back into the life sciences could ultimately create jobs in the future.

Loan forgiveness is the other portion of this program, allowing the debt created by a student's college education, to be forgiven for students taking math and science curriculums in life sciences and staying within those fields upon graduation. Approximately 175,000 jobs have been created in Missouri through the life science industry and, as it continues to grow, it provides a definite future for this state. An industrial-based economy is being replaced by a knowledge-based economy, which will require Missouri to have a trained and educated workforce in order to compete with other states.

Jobs and education, and economic development and education are inseparable and necessary. The Department of Economic Development wants to work in complete partnership with the Department of Higher Education and the community colleges to attract business to Missouri with an educated, knowledgeable workforce. The Department of Economic Development needs the higher education community as partners to sell Missouri to prospective employers as a state that believes in, supports, and delivers quality education.

Mrs. Wood asked if the tax credit portion of this program would create any competition between institutions for industry. Mr. Simmons stated that as colleges and universities continue to invest in life sciences and look at research and development from an academic standpoint, the possibility for competition exists. Research and development are quickly moving into commercialization, which will create jobs that will move the life science-related projects into commercialization, creating more jobs in manufacturing, advanced manufacturing, or technology. Competition per se among the universities is not likely, because the districts across the state will be empowered, within their districts, to devise their district to fit their needs. The Missouri General Assembly understands where Missouri's future stands with respect to life sciences.

Mrs. Wood asked if community colleges or their students would be eligible for loan forgiveness, and would community colleges be included in the tax credits? Mr. Simmons stated that community colleges are vitally important with respect to training in the state of Missouri. The community colleges are an integral part of the JOBS NOW Program, which would enable some of them to pool their current bonding capacities, through legislation, affording them more resources for additional training. If the curriculum in the community colleges includes math and science, students should have the same eligibility basically provided by the four-year institutions.

Commissioner Wilson noted that Dr. John Wittstruck actively participates with the Missouri Training Employment Council, comprised of five state departments, including private businesses. The Alignment of Educational Priorities and Policy Recommendations, Attachment C, shows that many of the priorities of the state of the workforce report were the same as the Coordinating Board for Higher Education's priorities, the Commission on the Future of Higher Education, the Business Education Roundtable, and the Achievement Gap Elimination Report. They are all closely aligned in setting these priorities.

Mrs. Carmichael expressed appreciation to Mr. Simmons for his presentation. She stated that the Coordinating Board is concerned about programs being in place to promote the creation of jobs in the workforce and Mr. Simmons is concerned about having an educated workforce to fill those jobs and attract employers. It is a perfect fit of the two departments. She invited Mr. Simmons to return again to strengthen the relationship.

Mr. Bass noted that some community groups are not familiar with the life science initiative and therefore suggested that through the media, the institutions, or the department's outreach programs, information be provided for better understanding. Also, Missouri's five percent unemployment rate is actually 11 percent and 12 percent in the urban areas, which is alarming during times of prosperity.

Mr. Simmons plans to visit those urban areas, providing information about life sciences and what is happening in that area that the citizenry can comprehend. His goal is to provide an opportunity for all citizens throughout Missouri to participate. There are segments in the African American and Hispanic populations where males between ages 18 and 25 are unemployed by 50 percent or greater. This is an issue that requires more work to bring those segments of the population into the workforce.

Recommendation Communicating the Coordinating Board's Thoughts Regarding the FY 2005 Budget Recommendations

Chair Kauffman requested Mr. Martin to read the recommendation from previous discussions regarding the letter and the position of the Coordinating Board.

Mr. Martin stated that it is recommended that the CBHE Chair send a letter to the House Budget Committee Chair, the House Appropriation's Education Committee Chair, and the Senate Appropriation's Committee Chair, expressing the Board's support for additional funding for the state's public higher education institutions, such as those provided in the Governor's FY 2005 recommendation. In addition, this communication should include the impact of proposed funding reductions to the DHE administration appropriations. This communication should include information related to previous funding reductions and the negative effects of funding reductions on not only the ability of the DHE to carry out it's current statutory duties and responsibilities, but also the inability to implement future initiatives such as those contained in the report of the Commission on the Future of Higher Education. The Commissioner and staff should deliver this communication to the appropriate parties and continue to work closely with the members of the General Assembly, and others involved in this FY 2005 budget process.

Mr. Kruse moved to adopt the motion. Mrs. Carmichael seconded the motion, and it passed unanimously.

Mr. Bass asked if statistics concerning the appeal for more FTEs and applicable job descriptions was available to include with the letter. Mr. Martin stated that this recommendation did not include providing information related to higher education's previous funding reductions, the impact of those reductions, staff reductions, or expense and equipment reductions. The first provision expressed the board's support for additional funding for the state's public higher education institutions as provided in the governor's FY 2005 recommendations.

Mr. Grove suggested that a reason be given for the request for more money, such as the increased number of students requesting services would increase the need for higher education in the future.

Summary of Proposed Legislation Related to Higher Education

Mr. Martin noted the list of proposed legislation related to higher education behind Tab C of the Board Book. During the Presidential Advisory Committee meeting, bills related to various higher education proposals, name changes, bonding proposals, and tuition freezes were discussed. The JOBS NOW bill was discussed during the Department of Economic presentation. The community college bills related to Boards of Trustees, capital appropriations, maintenance repair funds, and the transfer and articulation bill (HB 1242) were discussed. Mr. Martin noted that the status of the bills and legislation is updated each Friday and is available on the department's website.

Strategic Planning Issues
Report of the Commission on the Future of Higher Education

Dr. Debra Cheshier presented an overview of the final report of the Commission on the Future of Higher Education. The Commission, appointed by the governor in March 2003, was composed of a 29-member board. Through their deliberations they arrived at the primary themes of making sure the state is looking at preparation as a critical issue for postsecondary success, increasing participation, and improving the quality of our institutions. Eight of the ten recommendations are focused on those three major themes. The remaining two recommendations focus on implementation strategies for achieving those recommendations.

Recommendation 9 involves local communities, particularly the business community, with higher education, establishing a private sector alliance. The alliance would be charged with increasing awareness of the benefits of higher education and support for higher education, including increased financial support.

Recommendation 10 calls for establishing an Education Leadership Taskforce, intended by the Commission to provide more depth and detail on many issues that the Commission did not have time to adequately address, but also to arrive at specific action plans for implementing each of the eight recommendations.

Mrs. Carmichael asked whether recommendation 10 involves tasks and duties that are the responsibility of the Coordinating Board. She wanted the Coordinating Board to take a leadership role by examining each Commission recommendation, and how each should be implemented. She felt that if the governor appoints this Education Leadership Task Force, there is a danger that it may make decisions about restructuring higher education without appropriately involving the Coordinating Board. Dr. Cheshier stated that this particular taskforce would report annually to a number of bodies, including the Coordinating Board, and she did not believe the intent of the Commission was to usurp the authority of the Coordinating Board.

Chair Kauffman asked if the Commission might have developed strategies and possible funding sources had they deliberated longer. She asked if the call for establishing this task force was a way to complete the Commission's work or as a way to enlarge upon its charge. Dr. Cheshier stated that she believed the desire to establish a task force was largely a function of having a large commission comprised of very diverse individuals from every political spectrum with different life experiences; given the complicated nature of the issues they dealt with in only nine months, many Commission members likely felt additional time to adequately address these issues was needed.

Commissioner Wilson noted that the desire of the Commission is not to establish another commission, but to instead have a task force monitor implementation of the Commission's recommendations.

Mr. Kruse was pleased with the recommendation and believes it is necessary to move forward as outlined. He emphasized the importance of the alignment of PreK-16 and the connection of economic development with the business community for implementing the recommendations.

Mrs. Grove suggested that if a task force or another commission was formed, it should be task- specific and time-limited.

Mrs. Carmichael stated that it is recommended that the Coordinating Board for Higher Education acknowledge the contributions of the members of the Commission on the Future of Higher Education, by expressing sincere gratitude to the Commission members and Academic Resource Team members for their dedication and service to the state by recommending ways to improve the performance of Missouri's system of higher education. It is further recommended that the Coordinating Board direct the Commissioner of Higher Education to evaluate the recommendations contained in the report and recommend implementation strategies for the Board's consideration in conjunction with the Commissioner of Education and the Director of the Department of Economic Development.

The motion, moved by Mrs. Carmichael and seconded by Mr. Kruse, passed unanimously.

Chair Kauffman stated that this motion allows the Coordinating Board to move forward immediately to work on proposals for implementing the recommendations and communicates to the Commission and others the board's commitment to the work of the Commission.

Update on Measuring Value-Added Learning Improvement Project

Dr. Robert Stein presented an update on the Measuring Value-added Student Learning improvement project. Dr. Stein indicated this project raises questions concerning Missouri's assessment agenda. Who sets it? Who is responsible for it? Does it emerge haphazardly? Will it be superimposed top down as with K-12 and No Child Left Behind? Will it be designed collaboratively with quality principles as a major driver? There is a growing trend nationally for educational institutions to provide evidence of the value they add. The public wants evidence of learning that occurs as a result of a student spending time and money on a college or university campus. The RAND CLA Initiative is a national initiative, attractive to higher education because the institution is the unit of analysis, tasks are authentic, and students use computers to write memos and propose arguments. These assessments are scored on the computer. By participating in this pilot project institutions will have a direct experience with a national initiative that is underway, allowing them to benchmark against like institutions nationally. RAND is committed to being flexible by working with each institution, adapting their involvement to the culture of the institution.

Department staff believes there are limited risks to institutions that participate. CLA is not a perfect instrument, as it does not measure all student outcomes that are of interest to institutions. Staff is committed to building this initiative from the ground up, forming a consortium of institutions willing to withhold judgment, and willing to be fully immersed in designing the best pilot project possible. Staff is encouraging institutional leaders to view this as a decision to become engaged in the best of educational pursuits, that is: Seeking knowledge to inform understanding; to improve ability; to articulate perspective; and to increase the likelihood that policy decisions are informed by data garnered through systematic experimentation.

Dr. Stein is encouraged by the interest expressed by higher education institutions. Staff is available to support them or provide them with more information. A letter was sent to the chief academic officers. Copies of that letter summarizing some of the major points made during the board meeting will be sent to presidents and chancellors. This pilot project will involve only 100 to 200 students, per institution.

Chair Kauffman indicated it might be appropriate for the Coordinating Board to show its support for this pilot project and to encourage institutions to become involved and participate. Mrs. Grove moved that the Coordinating Board for Higher Education express its support for the department's initiative on Measuring Value-Added Student Learning and encouraged all institutions to participate in the pilot project. Mr. Bass seconded the motion, and it passed unanimously.

Annual Report of the DHE Proprietary School Program

Dr. Stein introduced the annual report of the DHE Proprietary School Program. The Proprietary School Certification handout, Attachment D, describes the many objectives to be accomplished. Providing information to the Coordinating Board about the scope and magnitude of this sector, its impact, and its potential impact in the state of Missouri, is a major objective. Currently, Missouri has 135 certified institutions operating programs at 158 instructional sites; more locations than the main campuses of the public and independent institutional systems in the state, not including extension and outreach. Proprietary campuses range from 20 students to 3,000 or more. In fiscal year 2002, 64,700 students were enrolled, representing a number equivalent to 75 percent of the public community college enrollment. Ninety-one percent of proprietary school students are high school graduates or GED recipients. Fifty-four percent have attended another postsecondary institution. Twenty-four percent of the graduates are from underserved populations.

Missouri has a vibrant, important postsecondary educational sector that makes a significant contribution in the state of Missouri. Dr. Stein introduced Mr. Leroy Wade who directs this program. Dr. Stein commended Mr. Wade for his contributions to the department, to the Coordinating Board, and to this state. Dr. Stein also introduced Mr. Turner Brooks who is the corporate director for Student Assistance at Vatterrott College and the current chair of the Missouri CBHE Proprietary School Advisory Committee, which is a group of committed institutional leaders who work closely with the department.

Mr. Wade and Mr. Hicks proceeded to provide the Coordinating Board with highlights of the Proprietary School Program, Attachment D. Mr. Wade introduced and expressed his appreciation of the support of Ms. Karen Finkenkoeller of ITT and Ms. Debra Crowe of Concord Career Institute, members of the Proprietary School Advisory Committee. Mr. Wade stated that the mission of this sector is outlined in the handout and was developed in consultation with the Advisory Committee, with the schools, and the contributions of DHE staff to their endeavors of educating the citizens. It is aligned well with the mission and values of the Coordinating Board for Higher Education and the Academic Affairs group. Staff wants to increase access, ensure quality for the students within the institution, perform well as a department, ensure that the institutions are high-performing institutions and contribute to the economic development in the state.

Staff categorizes the schools into three general groups:

• Missouri based private career schools, which number approximately 94 in the state. Most are for-profit institutions that range from small schools to large corporate-owned institutions. They offer a wide variety of programs.
• Non-Missouri based institutions that come into the state to provide education to Missouri citizens. The law is structured so they go through the certification process with the Department of Higher Education, providing a means to monitor the scope and magnitude of their participation in the state, and the contributions made to Missouri's educational system.
• Proprietary schools actively recruit students in Missouri to attend institutions in other parts of the country. These institutions also go through the certification process to be sure they meet the department's minimum standards and that Missouri's citizens get the financial and educational protections that the department provides them.

In 2002, $151 million was delivered through financial aid programs to provide access to the proprietary schools. The default rate has been falling each year and is currently at 9 percent at the proprietary schools, which is an indication of the improvements that have occurred in this sector. Mr. Wade noted a correction on the handout concerning the classroom base, which is actually 44,873. Minorities make up 20 percent of enrollment. Twenty-two percent are African American. Students without diplomas or GEDs, have declined from 9 percent last year to 7 percent this year. Those students have the ability to benefit the most from attending these schools. The median age of students now is 30-plus years.

Over 23,000 students graduated from the programs. Growth in terms of the number of degree programs has had an impact. Students are staying in the system longer than they have in the past. Seventeen percent of the completions were in degree programs, which have shown continual steady growth over the years.

In regard to Economic Development's cluster industries, three of the four largest program areas fit closely with those clusters. Allied Health, though not exactly a life science, is a support system for life sciences. Technical and mechanical programs and precision technology are all major components of the proprietary school programs and contributions in this state. The "at risk," referring to students without diplomas or GEDs, graduation rate is 76 percent. In postsecondary private career schools, at-risk students achieve better than the average student, possibly due to the supportive environment.

Statutory responsibility for proprietary schools was given to the Coordinating Board in 1983. Based on specific standards around different areas that relate to institutional quality, consistency, viability, and stability, this system has served well over the years. In dealing with a very diverse group of schools and students, a general expectation for a particular area, such as faculty qualifications, has been established without setting specific "trip wires". Hopefully, this system is meaningful, sets the appropriate rigor in that system, and allows for flexibility in adapting to each institution.

Program functions include issuance of certificates, dealing with new and existing certification processes, ensuring school closures are performed correctly, annual re-certifications, and providing technical assistance where needed. One long-term issue related to school closure is record maintenance and ensuring students have access to their records when they re-enter school or apply for jobs. Compliance includes site visits, phone calls, technical assistance, and meetings at the DHE offices.

The schools' startup operations consume much of staff's technical assistance resources. Annually, 200 applications are sent to entrepreneurs for prospective new schools. Staff also produces public information, which requires more staff time and effort, to the public about all institutions, particularly private career schools, so the citizens of Missouri can make informed choices about their postsecondary education. Statistical summaries, action reports to the Coordinating Board, a directory of certified schools, and the department's website are other areas that staff will work to improve.

Unapproved schools are a continual issue, because they have begun operations or been in operation without having been certified. Staff deals with this issue regularly and diligently requiring a tremendous commitment of resources. A related issue, nationally as well as in Missouri, are diploma mills, which are not welcome to setup or operate from a Missouri location.

The process of attaining high standards takes time. This year, staff provided schools with an electronic application for re-certification to make the process smoother. A section on diploma mills will be added to the DHE website to provide pertinent information as a resource for citizens of Missouri.

Mr. Brooks provided a comparison of the growth trends of the proprietary school sector in 2001 and 2002. The total income reported by school in 2001 was $182 million. In 2002, those schools generated an income of $213 million, an increase of 17 percent. Payroll expenditures totaled $81 million, an increase of 22 percent over the $67 million reported in 2001.

The administrative staff and faculty of this sector showed a 5 percent increase in 2002 with over 2,800 employees serving over 64,000 students. The graduation rate was 72 percent and 70 percent of the graduates were employed in training related programs. There are approximately 1,600 instructional programs, producing 23,000 graduates. The citizens served by the proprietary sector are not traditional college students. They are primarily from downsized companies. Phone calls are made routinely to those who stray, bringing them back into the programs so they can graduate.

The proprietary schools administered a total student financial aid loan volume of $93,329,000 in 2001. In 2002, $102 million was administered, a 9 percent increase. They administered $40 million in grants in 2001 and $48 million in 2002, a 20 percent increase. The proprietary schools provide customized training for industries in a short time period and are attuned to what the market requires its workforce.

Mr. Wade stated that Mr. Brooks made a very important point in that this sector has made a significant contribution, both financially and educationally. The proprietary sector has a role to play as an engine of economic development by providing postsecondary education to meet the workforce needs of this state. The changing nature of private postsecondary education is being driven by a consolidation of private career school education nationally and, more recently, in Missouri. Missouri was immune to this until about 18 months to two years ago. Many of Missouri's schools have become part of this consolidation process, changing the nature of the relationship between the agency and the schools.

There are positive aspects to this trend such as a huge influx of capital, flexibility of those institutions, and expertise. For the DHE as an agency, it brings some challenges such as Securities and Exchange Commission (SEC) regulations, a new cast of players for publicly traded corporations, and working together in determining the role and performance of the institutions. The stock market is also involved. A news story may have an impact on stock price and on the value of the school without any connection to events taking place in the classroom.

Dr. Stein and Mr. Wade have had conversations statewide about student mobility and credit mobility regarding sector-to-sector transfer. This includes the identification of the impediments and the barriers, and assisting the institutions to make the system work smoothly. This is a national trend and the Department wants to be active in this area to increase access, increase the number of Missouri's citizens completing degree programs, and finding ways to make multiple entry points to move citizens through the system.

Chair Kauffman asked if any state moved forward with students being able to transfer their credits from a Vatterrott or a Devry to a public two- or four-year institution. Mr. Wade stated that no state has a perfect system. Florida has a common course numbering system that includes some private career schools, which is a step in that direction. Other states are taking different approaches, but no one has the right answer. Staff is beginning conversations with appropriate groups to begin identifying the scope and magnitude of this issue and what is really being done to break down some of the barriers and arrive at the issues that need addressing.

Dr. Stein stated that one of the emerging issues is that states want to emphasize what the student should know and be capable of performing, the competencies, the assessment, and if the assessment agenda moves. The DHE wants the opportunity to demonstrate that Missouri's students are able to perform and have the skills and the knowledge base to be able to transfer.

Chair Kauffman stated that the Coordinating Board and the department understand the important relationship that they have with the proprietary schools and the important role they play within the total postsecondary experience. The independent two- and four-year institutions and the proprietary schools all serve a role in educating students in this state at whatever age they may be achieving success, and for this they are appreciated.

CBHE Appointment to the Missouri Higher Education Loan Authority

Chair Kauffman stated that Mr. Bass will be retiring from his position as the Coordinating Board's representative to MOHELA. She appointed Mrs. Grove to assume the position as the Coordinating Board's representative.

Chair Kauffman acknowledged that Mr. Kruse will chair a CBHE succession planning committee.

Information Items

Distribution of Community College Funds

Mr. Martin announced that a bill, filed by Representative Graham and Representative Harris of Columbia, to create what they called the Higher Education Investment and Affordability Act, would remove the loss limits on gaming boat, increase the gaming boat tax, and increase the admission fees on riverboats. These funds would be deposited into a dedicated fund for higher education called the Higher Education Investment Fund. These revenues would be used to issue bonds for University of Missouri projects as proposed by the University, provide funding for every other four-year capital recommendation that the Coordinating Board has recommended for FY 2005, provide additional funds for all of the scholarship programs, and provide up to $12 million for endowed chairs in life sciences at the University of Missouri. It would restore community college funding to FY 2002 levels and four-year institutions and CBHE core to FY 2002 levels.

Mr. Martin stated that Linn State is not included in the bill. He had assumed it would be included along with all the four-year institutions listed on the CBHE FY 2005 capital appropriation recommendations, but it was not. Mr. Martin will speak to Representatives Graham and Harris concerning their exclusion.

The lottery withholdings were released to all four-year institutions on February 1. The community college withholding was released to the community colleges on February 15. The total amount released to all institutions was $2.5 million.

Upcoming Election for Proposed Junior College District of Lake of the Ozarks

Dr. John Wittstruck stated that on April 6, 2004 there will be an election in the Camdenton RIII and School of the Osage School districts regarding the establishment of a new community college district and the election of trustees. Staff is working with four county clerks, and appreciates the work that Jim Matchefts and Leroy Wade have contributed to this effort. Eleven people filed for candidacy for the board of trustees. One filing was returned because it did not meet the cut off date on January 20th. The county clerks have been extremely helpful. Staff met with them on two occasions to review their understanding of the process and review their procedures.

The Coordinating Board looks forward to the completion of this project.

Update on Issues Relating to Lincoln University and State Fair Community College

Dr. Stein acknowledged that Dr. Marsha Drennon, president, State Fair Community College, has remained in the audience throughout the meeting so that she could address the Coordinating Board. Currently State Fair Community College has CBHE authorization to offer six Associate of Applied Science (AAS) degrees and two one-year certificate programs in Jefferson City. The policy framework between Lincoln and State Fair was clarified in February 2002. The current agreement is effective through summer 2004. From State Fair's perspective, they have made a significant investment in Jefferson City. The college expected over time, a return on their investment based on an anticipated growth of some programs. Those programs have not developed as expected, resulting in a burden on the institution fiscally to keep the programs open. The current agreement is not working well from the perspective of either institution.

Based on recently approved state policy, Lincoln University is defined as the primary provider for any new programming at the lower-division level in Jefferson City unless unmet needs can be identified to which Lincoln is unable to be responsible. Currently, both institutions have been experiencing a decline in enrollment. State Fair has notified the Commissioner that it is giving serious consideration to phasing out its Jefferson City programs. The institution has acknowledged that it needs to make a decision soon in fairness to staff and students. A joint statement was issued on January 21, 2004 by both presidents indicating that they would protect all students currently enrolled should State Fair phase out its Jefferson City programs.

Mr. David Mitchem of the Missouri Training and Employment Counsel (MTEC) is analyzing the gap that would exist if State Fair discontinues its programs in Jefferson City. A preliminary analysis concerning careers associated with the degree's at State Fair's Jefferson City site suggests that there are only a few areas that are projected to have a substantial number of openings. Mr. Mitchem is in the process of identifying alternatives and opportunities that exist for Jefferson City residents. Although not at community college prices, many of the courses and programs offered by State Fair are also offered by one or more other institutions within a 30 mile radius of Jefferson City. State Fair Community College intends to utilize data, so it can make informed decisions in a timely manner. Dr. Drennon has agreed to withhold making any decisions with her board until after the Coordinating Board has heard her report. Dr. Stein invited Dr. Drennon to add her commentary.

Dr. Drennon stated that over the last seven months extensive time has been spent in working through the current agreement to address challenges faced by State Fair Community College and Lincoln University. The presidents have agreed that they are not expending their human or financial resources well at this time. State Fair Community College is engaged in academic quality improvement projects, including a project that specifically involves site-based and program-based funding. Additional pressures on State Fair include an evaluation of available financial resources in light of enrollments going up between 5 percent and 6 percent annually, but being faced with withholdings over the past several years.

Dr. Drennon has consulted with other community college presidents, the DHE staff, and Dr. Henson and his staff. In speaking for State Fair Community College, she indicated that the current agreement is not a financially viable agreement. While enrollments initially increased during the first three years, they have decreased every year afterward. State Fair Community College is not currently able to offer a full range of general education courses that would allow students to transfer to four-year colleges, including Lincoln University, because the current agreement limits them to courses that support the AAS degrees only.

State Fair is committed to examining opportunities that would allow for the formation of a multi-institutional agreement to serve area students. Dr. Drennon indicated that her college agrees with the CBHE's policy on accessibility and increased participation. There is a concern about unnecessary duplication compared to necessary duplication and the level of unmet need. In analyzing their research on the population and the anticipated growth population in the Jefferson City area, it is clear there is a significant number of students who choose to attend other institutions across the state and out-of-state.

Dr. Drennon stated that the decision they face is critical. It impacts State Fair to the point that revenues are only half of their expenses in terms of the programs offered in Jefferson City. To operate a viable program in Jefferson City, the agreement would need to be significantly changed so State Fair could offer more general education courses including the AA degree to meet the students' needs in terms of their educational plans as well as to have additional resources to support their current program commitments.

Dr. Drennon indicated that she hoped that there would be opportunities to create the kinds of educational centers and the kinds of learning opportunities that support the Commission on the Future of Higher Education's Report, particularly as it concerns recommendation number five - the alignment of two- and four-year programs. At the same time she acknowledged that State Fair needs to act expeditiously to make some very difficult decisions. In order to function appropriately and in a financially feasible manner in Jefferson City, the college needs to expand its programming significantly.

Mr. Bass asked if Lincoln had been involved throughout the deliberations and whether they would propose a solution. He wanted to be assured that both institutions were working together.

Dr. Stein indicated that Lincoln has been and continues to be involved in discussions about Jefferson City's educational needs. He acknowledged that Dr. Joe Simmons has been in the audience and asked him to join Dr. Drennon at the table.

Mr. Simmons stated that he had been involved in much of the discussion concerning Lincoln University and State Fair, and that information item number 3 in the Board Book accurately summarized the current situation as Dr. Drennon had indicated. At this particular time, the financial integrity of both institutions is being seriously jeopardized. According to Mr. Simmons, Lincoln University does not have the financial resources to go beyond where it currently is in the scope of providing additional educational opportunities under the State Fair banner. While Lincoln has worked extremely hard since 1999 to bring forth the kinds of opportunities that would be meaningful for students and the citizens in the mid-Missouri area, they also found that the financial liability of things have come into question at this time.

Mrs. Grove asked if there was a need in Jefferson City for the type of programming offered by State Fair or is Lincoln currently meeting the need, and if the students have available to them what they need to further their education.

Dr. Stein stated that the initial analysis by MTEC suggests that opportunities and options are available for students to complete many of the programs offered by State Fair, but not at State Fair's prices. At the same time, there is an increased demand by students in this area for more general education at a lower cost. Community colleges do provide access at a different cost to the student. Dr. Drennon has said that for State Fair to offer the technical programs, they need to be able to offer more general education courses in order to make enough money to underwrite the expense of the technical programs, which would duplicate Lincoln's general education program. The MTEC analysis is not about general education, only about the technical degree programs.

Mrs. Wood stated that she thought State Fair Community college was put in a very compromising position. They were asked to fulfill a need that was not feasible. She wanted to know if there was a policy in place that could prevent that from happening again to other institutions, because it is terrible that so many financial resources have been spent.

Dr. Stein stated that the policy, which the Coordinating Board passed on lower-division coursework, lower-division certificates and associate degree delivery establishes processes to follow to meet local need and to have issues brought to the table at the front end before decisions are made.

Chair Kauffman thanked both institutions for their efforts in dealing with this situation. She indicated that the Coordinating Board appreciates what has been done, and understands that the decisions faced by both institutions are not easy ones.

Academic Program Actions

Dr. Stein stated that while this is a standard item, he wanted to make the Coordinating Board aware that Northwest was approved for two collaborative master's-level programs to be offered in Joplin, Missouri. There was much discussion and involvement of institutions in the legislation that changed Southern's name. Local institutions indicated support for these new degrees as they do not have the necessary expertise to launch these programs with Southern. Discussion is occurring between Southwest Missouri State University and Missouri Southern State University-Joplin on a Master of Arts degree in Teaching, but there are still some hurdles to overcome prior to formal submission of this proposal.

Proprietary School Certification Actions and Reviews

Dr. Stein stated that this item is standard. He expressed thanks to Mr. Wade and his staff for meeting the deadline, with assistance from consultants in submitting a report and staff analysis on the John Thomas College of Naturopathic Medicine's proposal for certification. A letter was sent to the college with the Commissioner's approval indicating that at this time, the department would have to turn down the college's application. To avoid a negative result, John Thomas College was given the option to either withdraw its application or to make a commitment to address the deficiencies that were identified by the external consultants' review of their application. A final decision will be made no later than six months from now.

Distribution of the Cycle-2 Department of Higher Education (DHE) Improving Teacher Quality Funds for Professional Development

Dr. Stein acknowledged that the evaluation of Cycle 2 proposals was complete and awards were made to eight institutions. He further indicated that negotiations, on the amount of reward for Missouri Western, were still under way when the Board Book was printed.

Dr. Stein produced a letter (Attachment E) for Commissioner Wilson to sign indicating that Western's award has been set at $117,111. Negotiations with Missouri Western State College have now been finalized.

Dr. Stein acknowledged that there were no fundable proposals for St. Louis City. As a result an additional RFP Cycle 2B was issued for $150,000 with a very short window for submission. The decision to issue a second Cycle 2 RFP is in response to the department's obligation to have geographical distribution in the use of these federal funds. The successful proposals will have to assure that at least 50 percent of the participants come from eligible schools in the St. Louis public school district; the remaining participants can come from surrounding St. Louis schools that are eligible, based on poverty and quality of teachers.

There being no further business to come before the board, Mrs. Carmichael moved to adjourn the meeting. Mrs. Wood seconded the motion, and it passed unanimously.

The meeting adjourned at 5:00 p.m.