Special Called Senate Meeting
March 31, 2015, 3:30 p.m.
Broun Hall Auditorium
Minutes
A full transcript is available for this meeting.

Senate Chair Patricia Duffy called to order at 3:30 PM. It was not necessary for this meeting to establish a quorum, since the presented report was a Pending Action Item only at this time. Patricia Duffy kept her remarks short before turning the meeting over to Larry Teeter and simply reminded everyone to go to the microphones when asking a question or making a comment for proper recording. She mentioned the way Steering has decided to handle this report that Larry Teeter is presenting. On the April 7 Senate meeting the report will be voted on whether or not to be accepted. The vote means to endorse the recommendations. If the Senate chooses to not accept the report, the Committee will be asked to reconvene to look at the recommendations and comments. We cannot, as a body, adopt the recommendations since this is not in our authority. The recommendations will go to the Administration.

Pending Action Item: Report of the ad hoc Strategic Budgeting Committee; Presenter: Larry Teeter, Chair-elect

Larry Teeter presented the committee members, gave a brief history of the process and presented the report of the Committee which he chaired (Final Report (ppt); Report from AHSCSB (word)).

Questions
Ed Youngblood (Senator, Comm. & Journal.) remarked that CLA went from being extremely profitable to losing money with the revised model. He said that he understands that the budget needs to be evened out to a certain extent but he was concerned that this will have an impact on the competitiveness of salaries.

Larry Teeter agreed that there will be units in the black and units in the red and everyone has seen their own college in the charts. The committee talked much about these numbers but he doubts that any unit might be able to keep a surplus of 17 million.

Ed Youngblood pointed out that these numbers actually are putting units into the red, not slightly evening things out. This will institutionalize lower salaries.
Larry Teeter replied that the market institutionalizes the salaries.
Ed Youngblood said that in some fields salaries paid are not SEC averages.
Larry Teeter replied that there are probably not many units on campus (that are SEC averages).

Tom Smith (Senator, Human Dev. & Family Studies) said it will be a big decision for his unit to come back next week and vote. He was wondering if it was possible to get access to the original Budget Committee’s information and have these reports over the weekend to look at them and discuss them with the faculty.
Larry Teeter replied that there is a lot of information on the Provost’s website and the Office of the Institutional Research site.
[Link to information on Provost's site:
https://auburn.edu/academic/provost/Strategic%20Budget%20Initiative/   ]

Tom Smith asked again about the location of the original Budget Committee’s report and Larry Teeter confirmed (that it is available as well).

Michael Stern (Senator, Economics) said that he was not sure what the cost basis of the weighting revenues flow is from an economics point of view, but understands it from a political point of view. The Committee is proposing (estimated) weights but did not report any standard errors to understand the reliability of the data. If there is a large standard error in the weights, the allocation of tens of millions of dollars becomes unreliable. He suggested reporting standard errors for those estimates and a confidence range. It is the same thing with the Delaware data – you will get different weights depending on which year is used. If you look at data over the years, it is possible to see the reliability and the extent of variation. So with estimation and re-estimation of data using different models, the difference can make millions and millions of dollars. He emphasized that standard errors and their implications need to be reported.

Larry Teeter agreed that he had a good point.
Connor Bailey (Parliamentarian) remarked that even with 3% deficit, it means substantial amounts of money. He expressed concern that a high portion of college budgets are tied to salaries and that a future Provost - the current Provost would never do that – might see reason to downsize a particular unit and eventually let people go. He was wondering if the Committee had considered the implications not only on hiring of new people if potential financial exigency has been declared, but also letting go of faculty with the reallocation model.
Larry Teeter confirmed that the Committee had these discussions. He believes that if the RCM model is implemented, it will be an artifact of the model that money could be taken away from some units on a regular basis unless it behaved in certain ways.

Connor Bailey repeated his question whether this could lead to declaring financial exigency for a unit and releasing of faculty.
Larry Teeter replied that everyone on the Committee was worried about that but they are hoping the model will work out fine and everyone will be making more money in the future.

Cindy Bowling (Pol. Science, not a Senator) said that she had two concerns, one having to do with being more efficient and having larger class sizes which is pedagogically not a good idea; the second one dealing with graduate tuition waivers being completely allocated in particular colleges. It seems that there is an incentive to take in-state instead of out-of-state waivers – how exactly will graduate tuition waivers be allocated?
Larry Teeter said that the budget is made for the year ahead and you will know that you will bring in x number of graduate students. You add the tuition dollars associated with these graduate students and then decide whether to give the students a tuition waiver or to keep the money.
Cindy Bowling wondered what the incentive would be to recruit the best and brightest students to increase the reputation of the university.
Larry Teeter replied that better papers can be written and better research be done.
Cindy Bowling repeated that there is now less incentive to hunt for the best and brightest students but more of an incentive to do an in-state-tuition over out-of-state tuition waiver, if the college is paying for it all and especially if it is a college that does not have a lot of money for graduate education. Who is paying for the waiver?
Larry Teeter said it is the college. If a student is coming and handing over $1000, you can hand it right back as a way of “net zero”.

Chris Newland (Psychology, not a Senator) remarked that graduate education is different in cost from undergraduate education. Especially freshman and sophomore level classes are often taught in big classroom settings. Within colleges there are discrepancies in departments of how important graduate education is over undergraduate education, but weighting factors are done by college. He wanted to know whether the Committee had discussed what impact this would have, for example, to departments heavy on undergraduate education and struggling to mount a doctoral program and whether there would be a way to allocate weights more on departmental basis or based on density of graduate students in certain departments.
Larry Teeter replied that the weights were based on departmental levels and that the Committee only used costs from doctoral level institutions.
Chris Newland remarked that the weights are allocated on college level.
Larry Teeter said that student credit hours produced in a department are aggregated on a college level. If a department produced 1,000 credit hours in 2011 and the weights were 1.2, then 1,200 weighted credits went forward to be aggregated with the other departments. All credits are weighted at the department level.

Robin Jaffe (Theater, not a Senator) asked if the report was looking at the year 2012 or 2013 and Larry Teeter said that they looked at both.
Robin Jaffe asked if it was possible to go back 10 years and look at the numbers and what they would do to a college. If 14 million dollars are taken every year from CLA to even things out, something does not seem to be right. There are not enough data based on years to see what would actually happen. His second question was about who will pay for Facilities’ cost.
Larry Teeter answered that the college will pay for Facilities.
Robin Jaffe was concerned that this is a lot of additional money to pay. Every time Facilities come to change a light bulb, to touch up paint, to do basic cleaning and maintenance, it costs money. There will be a point in time when buildings are going to start falling apart because the department has to choose whether to give the money to faculty, students or the building because there is not enough money to go around. He further said that he had worked with Facilities and that he knows that they have a different maintenance plan. If the money has to come from the colleges, it will be difficult.
Larry Teeter replied that we are having problems now.

Jerrod Windham (Senator, Ind. Design) remarked that the word “incentive” is being mentioned a lot, incentives towards faculty, departments, the educational institution, etc. He was wondering where the incentive for the central allocation is coming from, which is around 17% of the revenues, the entities that are funded by the central allocation and where the incentives for them would be to cut cost. He recommended including some language in the report in respect to incentivizing for the “tax” to come down.
Larry Teeter asked if he was talking about the charge which that pool would make and which has to be allocated to the colleges and schools.
Jerrod Windham said that in his understanding the revenues (17%) at some point are taken from the units, the colleges, and distributed amongst the central allocation.
Larry Teeter replied that the 17.5 number he mentioned in his presentation was something different. It was the Mission Enhancement participation rate.
Jerrod Windham replied that the participation rate would be required to fund all the schools, correct? At some point it was mentioned that 70% tuition in the budget model currently proposed is going to go to the instructing unit. The College of Architecture, Design, and Construction comes very close to breaking even as far as revenues and expenses were concerned until the central allocation fund needed to be paid. Incentives are being proposed towards the academic units to find ways to become more efficient and to cut costs. It would be nice to see central allocation reexamining how much that it is that the units pay that is distributed across those units and some incentive toward those units to cut costs and ultimately cut that payment that each college makes. This recommendation should be included into the recommendations in the report.
Larry Teeter said that the Committee saw the variation shrink with the two allocation methods, opening the door for lower participation rates and less negatives to pay back from the fund. Depending on what the Provost needed for other initiatives, the rate could be much lower than 17.5%.
Jerrod Windham replied that this was all seen from the academic side and that he was talking about the administrative side of the university that is not bringing in students.
Larry Teeter said that the Committee did not look at this side at all.

Drew Clark (Dir. Inst. Res. & Assessment, not a Senator) said that both the original budget model and the one coming from the Senate Committee allocate central unit costs to the revenue producing units. The model does provide incentives for administrative units to control their costs because it sets up a governance group called a Central Unit Allocations Committee with faculty representation on it. It would examine the budgets of each of the central support units over time and recommend values for them. This would lead to close analysis of these budgets in some cases for the first time and also to clarification of service expectations.  It would also address Robin’s question to what is the contribution to the budget of the Facilities Division that entitles you to services on a periodic basis.  He believes that the model being considered will try to bring focus onto those expenses that are not mission accomplishing expenses but are necessary for the accomplishment of the mission.

Hulya Kirkici (Electr. Eng., not a Senator) asked a question in regard to weighted student credit hours. Since freshmen and sophomores usually cost less than PhD and Master students, wouldn’t the reputation of PhD programs be negatively influenced because there is no incentive to recruit PhD students?
Larry Teeter replied that there is no distinction in the weights that the Committee created. The norms were taken from doctoral programs irrespective of the number of students enrolled. At least, graduate programs were on the books.

Bob Locy (Senator, Biol. Sciences, also a member of the ad hoc Strategic Budgeting Committee) remarked on the issue of Colleges going from positive to negative margins that these numbers were pre-Mission Enhancement Fund contributions. There is not really positive revenue that remains in the College necessarily. With any of these models Mission Enhancement Funds are provided to bring everyone back to equitable and even levels by the end of the year.
Larry Teeter replied that it is not entirely clear what happens to a program that was in the black and with the application of the Mission Enhancement Fund it is still in the black. He assumed that the program will not be able to keep a lot of the money.
Bob Locy emphasized that a College that starts out highly positive and winds up negative and therefore it’d have to sustain the negative balance at the end of the budget year, will be able to come back to equal with the help of the Mission Enhancement Fund. It is a matter of how transparent the process is before the Mission Enhancement Fund contributions and whether to lower the overall Mission Enhancement Fund contribution that made the Committee consider weighted student credit hour averages as a method of allocation of tuition.
Larry Teeter added that he believes that the Mission Enhancement Fund is designed so that it can bring back all units to zero.

Ed Youngblood (Senator, Comm. & Journ.) asked why weights are needed if the Mission Enhancement Fund can bring everybody back to zero.
Larry Teeter said that if you are, for example, in the hole by 10 million and were brought back to zero for 5 or 6 years, a future Provost might want to go into a different direction and only bring that unit back to within a 1 million range to zero.
Ed Youngblood asked to clarify whether these are tuition dollars that a college is bringing into the university and how these are divided up.
Larry Teeter replied that right now they are not divided and passed out as tuition dollars.
Ed Youngblood rephrased his question whether it is correct that if x amount dollars in tuition has been brought in, a percentage of that is given to you.
Larry Teeter said that (under the model) it could be more or less depending on the weighting scheme.

Beverly Marshall (Business, not a Senator, member of the Huron Steering Committee) mentioned that the originally proposed budget model also had a Mission Enhancement Fund. She asked if the concern was potential power abuse and large changes or swings in how the Mission Enhancement Fund was awarded, and whether anything else besides weighted student credit hours was looked at to minimize swings - in other words, to leave the allocations as they were, but with a mechanism such as an oversight committee to avoid large swings on an annual basis.
Larry Teeter replied that the only stop-guard was the 3% limit.
Beverly Marshall said that if the proposal was left without weighting and still had a Mission Enhancement Fund with restrictions as to how much a College can swing, valuable information on how costly instruction is in different units would still be available, but lost in the case of weighting of credit hours.

Michael Stern (Senator, Economics) remarked that the basic recommendation is to use weighting. He emphasized that the Committee, however, upon formation was unweighted, meaning the size of a College or the fraction of the budget was not considered when assembling the Committee membership which he finds a bit ironic.

Pedro Cebollero (Interim Senator, Foreign Lang. & Lit.) asked whether it has been considered that administrative units also share in the cost control and potential budget reduction in the same way as academic units.
Larry Teeter replied that this aspect was not at all addressed and that he did not see any data on cost of administrative unit functions.
Pedro Cebollero asked whether that should be included in this model.
Larry Teeter said that he did not know how difficult it would be to get data.
Pedro Cebollero clarified that as he sees it, administrative units remain the way they are while academic units – his own unit (CLA) for example, are seeing a big reduction. Shouldn’t administrative and academic units share the cost of this type of budget?
Larry Teeter agreed that this is a good point.

Bruce Smith (Substitute Senator, Pathobiology) remarked that it would be helpful to see the real numbers (dollars) under the original model and the proposed modified. He said that Vet Med has been gaining in the new model, but under the first model had been losing 17 million. The mistake people are making is thinking that under a specific model they are making a lot of money, but it is only a model. He personally would prefer things brought closer to a line, and in terms of cost of instruction weighting of college expenses is very important across the disciplines. It would be important to know however what the actual numbers are with each model.
Larry Teeter replied that he was not sure what the 2012 model was, but that he had assumed real numbers were used.

Marcie Smith (Committee member) acknowledged that this is a great point and the Committee tried it, but it is not easy to do. The cost of square footage, all cost of facilities, etc. are difficult to compare because all colleges had those expenses allocated in a budget model, where they did not in the current budget and they did not have to cover them.

Rusty Wright (Senator, Fisheries) asked for the definition of classroom square footage, actually the definition of “classroom”. His second question was in regard to incentives and whether these incentives are just for cost savings. What are these incentives really? He said he cannot see a budget pool growing that is fixed and only the deck chairs are moved around.
Larry Teeter answered that he did not know where the numbers for square footage for the different units came from. Facilities had likely been involved.
Rusty Wright repeated his question about incentives. He said he only sees incentives for cost savings, but not for enhancing revenue.
Larry Teeter said it could probably be grants and gifts.
Rusty Wright stated that these are items that do not appear in the allocation model.
Larry Teeter added it could include students in the respective program.

Leonardo De La Fuente (Senator, Entomol. & Plant Path.) acknowledged the hard work of the Committee but suggested that the major issue that the Committee is addressing is to minimize the damage of the new budget model. Therefore, if there is damage with the new model, how does that compare to our current situation? He asked what the advantage of the new model would be if damage has to be minimized.
Larry Teeter said that someone else might have a better response to this question, but he sees a big part of the new model to be an opportunity to establish a pool of resources that could be allocated to new initiatives or to changing conditions. This could probably also be done with the old model, but never has.

Lisa Kensler (Senator, EFLT) came back to the question of incentivizing and what the model is supposed to be incentivizing versus what the Strategic Plan suggests is needed to move forward. One theme of criticism across the colleges for the new budget model is that it incentivizes competition between departments and colleges when on the other hand increased collaboration, interdisciplinary work and innovation is the goal. She wanted to know if the Committee had addressed this paradox and what the result was.
Larry Teeter replied that they had discussed the issue of competition in regard to how different units will teach out of their discipline to attract students, for example by creating courses with titles like “Forest Economics”, courses that would not be expected, but could be taught within the discipline and thus draw in student credit hours. He did not offer any suggestion of what could be done about this kind of behavior, but Curriculum Committees and the like would have to approve these classes and would have to be very observant.
Lisa Kensler repeated her question of what the implication for interdisciplinary work or cross-departmental collaboration would be if you’d incentivized competition.
Larry Teeter said the only thing he could think of would be awarding money to the home college as opposed to the place of instruction.

Patricia Duffy thanked and reminded everyone of the April 7 Senate meeting where there will be a vote to accept the report which means endorsing the recommendations. If the report does not pass, the Committee will be asked to come back to the Senate with some modifications in May.

New Business: Patricia Duffy, Senate Chair
None
Unfinished Business: Patricia Duffy, Senate Chair
None
Adjournment: Patricia Duffy, Senate Chair, at 4:50 PM