Board of Regents Meeting

Special Meeting of the
Finance, Facilities, and Land Management Committee
Thursday, September 14, 2000; 9:00 a.m. - 4:00 p.m.
Room 106 University Commons
University of Alaska Anchorage
Anchorage, Alaska

Committee Members:
Elsa Froehlich Demeksa, Chair
Mary Jane Fate
Joe J. Thomas
Joseph E. Usibelli, Jr.
Michael J. Burns, Board Chair

I. Call to Order

II. Adoption of Agenda

MOTION

"The Finance, Facilities, and Land Management Committee adopts the agenda as presented.

I. Call to Order
II. Adoption of Agenda
III. Status Report on Implementation of the Expanded College Savings Program
IV. Full Board Consent Agenda
A. Project Budget Approval and Authority to Bid and Award a Contract - UAS William Egan Library Classroom Wing Addition
V. Status Report on UAF Deferred Maintenance Backlog and Capital Appropriation History
VI. Status Report on the FY02 Capital Budget Process
VII. UA/State Land Discussion Update
VIII. Future Agenda Items
IX. Adjourn

This motion is effective September 14, 2000."

III. Status Report on Implementation of the Expanded College Savings Program
Reference 1

At the June 9, 2000 Board of Regents' meeting, the board authorized the administration to proceed with development and implementation of a new and expanded college savings program. A copy of the narrative from the June FF&LM Committee meeting is attached as Reference 1A. The narrative provided background information on the ACT Plan and what the administration is trying to accomplish. Also attached, as Reference 1B, is an updated implementation outline.

A draft copy of the executive summary section of the request for proposals (RFP) from third-party providers is attached as Reference 1C. The RFP is scheduled to be issued to third-party providers on or about September 8, 2000. The executive summary describes what the university will be asking the provider to do and gives proposers an overview of the university's expectations with regard to the services to be provided.

An implementation team has been established, an actuary is currently doing an actuarial review of the ACT program, the university's external auditors are reviewing the ACT financial statements, the conceptual design of the program and its operation has been developed, and a process for selection of a third-party provider has been established.

The RFP includes a number of representations and commitments that will eventually become part of the university's contract with the successful proposer. Although subject to negotiation, changes from stated representations will be very difficult to accomplish. Some of the more significant commitments and key features of the program include:

~ Commitment of $175,000 in matching funds to support a marketing campaign in Alaska for each of the first two years of the contract. Funding for the expenditure will come from ACT Plan reserves.

~ The "tuition value guarantee" for ACT Plan participants will become a risk borne by the university rather than the ACT fund. The traditional ACT guarantee states that credits purchased at today's tuition rates can be redeemed at any time in the future for tuition at the University of Alaska regardless of the then current rate of tuition or earnings history of the participant's account. There is still a risk that the university could experience a period of tuition inflation that exceeds the net return on the ACT balanced fund over some period of time. The cost to the university in that instance would be the tuition discount necessary to allow a student to attend school at less than full tuition. This risk is somewhat mitigated by the full distribution of earnings to participants' accounts rather than having a holdback of earnings to fund any potential shortfall. It is also mitigated by the fact that ACT credits would be of greater value if used for tuition at UA than they would be if used to attend school elsewhere. In theory, if earnings of the ACT investment fund average as much or more than tuition inflation at the University of Alaska, there should be no cost to the university.

~ The "no loss of principal guarantee" is intended to replace the current implied or perceived earnings guarantee of a treasury money market rate of return on ACT accounts. The RFP requests that this guarantee will be funded through the ACT investment fund or the third-party provider at no cost to the university.

~ The "senior year scholarship" for participants who contribute X dollars to the program is intended to help market the program and to provide an incentive for students with substantial funding available for education to attend UA and to complete their education. Terms and conditions will be negotiated with the successful proposer.

~ The "exemption from the nonresident tuition surcharge" for participants who contribute X dollars to the program is intended to remove a significant obstacle for nonresident students with substantial resources who might otherwise be eligible for recruitment. In the majority of instances, nonresident students who return to the UA for a second year return as residents. This allows them to collect a permanent fund dividend and avoid the nonresident surcharge. Terms and conditions will be negotiated with the successful proposer.

Jim Lynch, associate vice president for finance, will be available to answer any questions the committee may have regarding implementation of the programs.

IV. Full Board Consent Agenda

A. Project Budget Approval and Authority to Bid and Award a Contract - UAS William Egan Library Classroom Wing Addition Reference 2

BACKGROUND
The project received schematic design approval by the Board of Regents on April 24, 1992 at a total project cost of $6,046,000 (Reference 2). The design was completed but did not proceed to bid stage due to lack of funding. Partial funding for the project of $5.5 million was received in the FY01 capital budget. In the intervening eight years, the project cost has escalated due to inflation. This re-approval is requested due to inflationary cost increases.

PROJECT SCOPE
The current project scope has not changed significantly from the original 1992 design. The classroom wing addition will provide 16 general assignment classroom spaces ranging in size from a 12-student seminar room to a 154-seat lecture hall. Ancillary spaces include public restrooms and building related storage. No offices are included in the addition. Additional parking as required by local ordinance is also being provided.

The only changes from the 1992 design currently anticipated are as follows:

1) evaluate and revise as necessary for changes to building codes;
2) modify foundation design at intersection of existing and new construction;
3) revise data and communications specifications;
4) revise fire alarm design.

Design work is being performed by Jensen Yorba Lott, the designers of the original William Egan Library. The addition will utilize the same materials as the library.

The project will be completed in phases. This first phase of construction will include all foundation, structural steel, roofing and all mechanical and electrical rough in. The second phase is dependent on funding in the FY02 capital budget. If funding is received with the FY02 capital request as anticipated, a second contract will be awarded for completion of the facility as planned and designed. If the balance of the funding is not received, sufficient unexpended funds should remain in the FY01 appropriation to make a portion of the facility available for classroom use. A third phase would then be required to complete the facility.

FUNDING SOURCE
The total project budget is currently estimated at $8,000,000. Phase I construction is estimated at approximately $3,800,000.

The funds for the completion of the classroom addition will be the highest priority for UAS capital funds in FY02.

SCHEDULE
Complete revisions to design 9/15/00
Advertise for bids 10/15/00
Award construction contract 12/1/00
Complete construction 2/1/02

UAS is seeking approval of an increase in the "total project cost" authorization from $6,046,000 to $8,000,000 dollars. A project budget is included in Reference 2.

Mr. Keith Gerken, UAS director of Facilities, and Carol Griffin, vice chancellor for Administrative Services, will be available to explain how the project will be phased and answer any questions regarding the project.

The President recommends that:

MOTION

"The Finance, Facilities, and Land Management Committee recommends that the Board of Regents approve an increase in the total project cost budget for the Egan Library Classroom Wing Addition from $6,046,000 to $8,000,000, and authorize the administration to proceed with the award of Phase I of the project at a construction cost not to exceed $3.8 million. This motion is effective September 14, 2000."

V. Status Report on UAF Deferred Maintenance Backlog and Capital Appropriation History

Reference 3

Joe Beedle, vice president for finance, will update and discuss with the committee how the campuses are proceeding with accumulation of deferred maintenance information and completion of projects. Frank Williams, UAF vice chancellor for Administrative Services, and Kathleen Schedler, UAF director of Facilities Services, will discuss the UAF needs for continued funding for deferred maintenance.

This is an information item; no action is required.

VI. Status Report on the FY02 Capital Budget Process Reference 4

A memorandum summarizing the results of the Business Council review of the capital requests is included as Reference 4. Joe Beedle, vice president for finance, will update and discuss with the committee how the capital budget request process is proceeding. This is an information item; no action is required.

VII. UA/State Land Discussion Update

Joe Beedle, vice president for finance, will update and discuss with the Finance, Facilities, and Land Management Committee the status of various lands projects and issues including Brady Glacier, Cape Bingham, EVOS buyout of selected Prince William Sound properties, and the SB7 Lands Bill.

MOTION

"The Finance Facilities and Land Management Committee of the Board of Regents goes into executive session at _______ A.D.T. in accordance with the provisions of AS 44.62.310 to discuss matters the immediate knowledge of which would have an adverse effect on the finances of the university related to SB7 Lands Bill and other land issues as may be designated by the chair.

The session will include members of the Board of Regents, President Hamilton, General Counsel Parrish, and such other university staff members as the president may designate and will last approximately 2 hour(s). Thus, the open session of the Finance, Facilities, and Land Management Committee will resume in this room at approximately ____ A.D.T. This motion is effective September 14, 2000."

[To be announced at the conclusion of the executive session.]
The Finance, Facilities, and Land Management Committee concluded an executive session at ____ A.D.T. in accordance with AS 44.62.310 discussing matters the immediate knowledge of which would have an adverse effect on the finances of the university. The session included members of the Board of Regents, President Hamilton, General Counsel Parrish, and other university staff members designated by the president and lasted approximately ____ hour(s).

VIII. Future Agenda Items

A. Report on Land Management Operations

B. Budget Review Special Meeting

IX. Adjourn