MINUTES OF JUNE 21, 1994 MEETING The meeting convened at 9:00 a.m. in room 2428 Cathedral of Learning. UPBC members present were: Thomas Anderson, Jacob Birnberg, George Chambers, Ronald Gardner, Darlene Harris, James Holland, James Isaacs, Randy Juhl, Carol Kenderes, Peter Koehler, Franklin McCarthy, Richard Nelson, Jack Ochs, Ben Tuchi, Philip Wion, and Judith Zimmerman. Also present were: Glenn Avick, John DeVitto, Michael Gaber, Rhonda Gross, Ana Guzman, Jeffrey Liebmann, William Madden, Jeffrey Masnick, Dennis O'Connor, Paul Stieman, and Lawrence Weber. UPBC members not present were: Nitin Badjatia, Toni Carbo Bearman, Thomas Detre, Dennis McNair, Sharon Nelson-Le Gall, Mark Nordenberg, Jeffrey Romoff, and Julius Youngner. Approval of Minutes The UPBC approved the June 8 minutes. Magellan Telescope Project O'Connor stated that astronomy will be at the intellectual forefront of the next century. He explained his assumptions regarding the project, including: astronomers need guaranteed access to telescopes to do their work; the University has astronomers and plans to have more in the future; and the University will not recruit individuals into an environment in which they cannot perform their work. He expressed concern over the increasing competition for telescope time, the loss of telescopes due to urban sprawl, and the number of new telescopes that are proprietary in nature. O'Connor explained that the Magellan project will provide the University guaranteed time on both of the planned Magellan telescopes in Chile, as well as time in Arizona and a new telescope being built by the Mexican government in Baja California. Involvement in such a consortium has been a goal of the Department of Physics and Astronomy for many years. He stated that University participation will promote increased collaboration and provide a vehicle for undergraduate education. O'Connor compared the estimated cost of between $5 million and $10 million to University investments in start-up costs for science faculty, adding that the telescope will be available as a resource to faculty for many decades. In response to Ochs' question, O'Connor stated that the proposed project is an investment in the future of both current and anticipated new astrophysics faculty. Birnberg expressed concern that the Department has been unwilling to commit to the project as its top priority. He added that the projected operating costs of $326,000 per year equated to approximately $8 million in required endowment funds, which would raise the total project costs to $16 million. O'Connor responded that the University may respond to other initiatives from the Department as needed in the future. Ochs affirmed the Chancellor's role in pursuing academic initiatives that promote excellence. He added that a role of the UPBC is to select existing activities for reduction or elimination in order to maintain the financial integrity and quality of the University. He supported the active participation of the Chancellor in helping identify such activities. Zimmerman stated that a commitment to a single department of the proposed magnitude is inappropriate given the state of overall research facilities. In response to Chambers' question, Gross replied that the original contract, which is still being finalized, called for two payments, one to be made in 1996 and one to be made between 1997 and 1998. Koehler called the scientific nature of the project sound and worthy. He expressed concern over the state of existing undergraduate physics laboratories and inadequacies in the current Department budget. He stated that science faculty are expected to raise money from research projects to repay the University's investment in start-up funds in four years, but that astronomers have not historically raised that level of funding. Koehler asked how the project would be funded if sufficient private funding could not be raised. O'Connor responded that the University must position itself for the future, making itself more competitive for both faculty and students. He stated that lack of guaranteed telescope time has hampered the ability of astrophysics faculty to generate research funding. He added that, should private funding not materialize, the Chancellor's current discretionary fund of $4 million could pay half of the projected cost. Wion stated that the UPBC should not act on the proposal until cost and debt service estimates were more complete. Nelson stated that this visionary research project was obviously a top priority of the Chancellor. He expressed concern over the subsequent lack of priority being received by undergraduate education, an activity that is not as exciting or dramatic as the proposed project. FY 1995 Capital Budget Gross presented the FY 1995 Proposed Capital Budget, consisting of a list of proposed capital projects totalling $119.3 million. Recommended projects include the following: UNFUNDED PROJECTS ($27.5 million) -- Those without identified funding sources, most of which will be funded through the E&G operating budget, ranked according to institutional priority. 1. Compliance with Americans with Disabilities Act (ADA) - $800,000 2. Classroom renovations - $1.0 million 3. School of Health and Rehabilitation Sciences building purchase - $13.2 million 4. Masonic Temple renovations - $970,000 (phase 1) and $6.9 million (phase 2) 5. Admissions related renovations - $2.6 million 6. FAS new hire renovations - $575,000 7. Space management system - $130,000 8. Utility study update - $100,000 9. Salk Hall security system - $150,000 10. Engineering calculus lab - $115,000 11. New ventilation for Dental Medicine labs - $70,000 12. Physics lab upgrades - $70,000 13. Nursing Learning Resource Center equipment - $216,500 14. Engineering distance learning classroom - $130,000 15. Public Health Infectious Diseases and Microbiology autoclaves - $140,000 16. Varsity sports/intramurals renovations - $50,000 17. Learning Skills Center expansion - $183,900 18. Bradford gymnasium renovation design costs - $50,000 FUNDED PROJECTS ($70.4 million) - Those that have either cash in hand or identified funding sources, such as private giving. -- Medical Research Facility State funds - $5.1 million -- College of Business Administration - $18.8 million -- Magellan Telescope Project - $8.0 million -- Athletics renovations, phases 1 and 2 - $7.1 million -- Athletics renovations, phases 3-8 - $12.3 million -- CIS projects using student computing fee - $6.2 million -- Telecommunications switch - $6.0 million -- Scaife Hall Cell Biology and Physiology - $1.0 million -- Bioscience Tower Neurobiology Shell Space - $900,000 -- University Printing five-color press - $800,000 -- Field House renovations - $775,000 -- WPIC interior building improvement - $1.1 million -- Transportation Office vehicle replacement - $441,000 -- Parking Lot A repairs - $340,000 -- Food Service cafeteria renovations/equipment - $300,000 -- WPIC adolescent residency program - $300,000 -- Johnstown parking lot/roadway restoration - $250,000 -- Cell Biology and Physiology equipment - $250,000 -- Johnstown low tension conduit (CIS) - $190,000 -- Iroquois site renovations - $150,000 -- Johnstown residence facilities renovations - $125,000 PROJECTS UNDER $50,000 EACH ($500,000) PRESERVATION PROJECTS ($20.8 million) Gross explained that the proposed capital budget contained $64.8 million of recommended projects to be funded during FY 1995, of which $22.3 million were from funded projects and $42.5 million were from unfunded projects. The proposed budget defers a total of $90.1 million in capital projects to future years. Wion moved that the UPBC strongly recommend that final action on the FY 1995 Capital Budget be deferred until such time as the major parameters of the long-range plan and budget have been sufficiently developed to provide a sound context for FY 1995 capital commitments. Anderson seconded. Wion stressed the importance of reviewing topics being addressed by the Strategic Issues Subcommittee, as well as procedures for prioritizing projects whose funding is expected to be raised through gifts and projects indirectly funded by revenues generated by academic units. He stressed the need to update the long-range planning parameters produced in December 1993 to include new projects approved subsequently as well as more recent cost estimates. Ochs stated that the long-range planning parameters did not take account of a number of projects included in the proposed capital budget and that the originally projected University deficits are almost surely understated. Gross disagreed, stating that the impact on the E&G budget through FY 1999 was not significant. Ochs also expressed concern that the long-range parameters were used in the debt capacity study that revealed the University's relatively high ratio of debt service to operating budget. Tuchi reaffirmed his commitment that no capital project to be funded from gifts will proceed until the pledged funding is in hand. Tuchi clarified that the Board of Trustees will not vote on the FY 1995 Proposed Capital Budget on June 30. Rather, the Board will vote on the FY 1995 Proposed Unrestricted Operating Budget that includes a $2.7 million debt service placeholder that cannot be spent until the Board approves a new bond issue. Koehler expressed concern about whether the University could finance the proposed capital project list without sacrificing academic programs. In response to Ochs' question, Stieman explained that the proposed $6.0 million telecommunication switch project was a technology upgrade that would provide the means of enhancing service. Tuchi cited several problems associated with deferring action on the Proposed FY 1995 Capital Budget, including: a master plan must be presented to the City of Pittsburgh by October 1, 1994 for the purpose of obtaining continuous use allowances; certain proposed capital projects are already proceeding; and certain buildings require immediate attention. He recommended forming a subcommittee with the charge of examining the capital project list and bringing recommendations for appropriate action to the UPBC within 30 days. Specifically, the subcommittee would review the method of financing, impact on operating budget, and format of previously-approved projects and projects proposed for FY 1995. McCarthy agreed that the UPBC should not examine individual projects, but rather design the policies that drive capital decision making. Ochs suggested that the subcommittee also draft such policies. Birnberg supported the concept of a subcommittee to assess consistency of capital projects with long-range institutional goals. McCarthy moved to amend the motion, changing references to FY 1995 to FY 1996. Juhl seconded. Wion expressed concern that the amendment would reduce the impact of the original motion extensively. The amendment to the motion was approved 7 to 4 (with one abstention). Wion withdrew the motion. Birnberg moved that the UPBC form a subcommittee to examine the capital project list and bring recommendations for appropriate action to the UPBC within 30 days. McCarthy seconded. The motion was approved unanimously. Anderson, Gardner, Harris, Kenderes, Wion, and Zimmerman volunteered to serve on the subcommittee. The meeting adjourned at 11:40 a.m.