Report on the Faculty Senate, Robert Faaborg, Chair of the University Faculty
Chair Faaborg's report is included in its entirety.
The bylaws of the University Faculty call for the Chair to report to the University Faculty on the activities of the Faculty Senate. I'll first summarize these activities and then report on some of the recent actions of the University's Board of Trustees. As you know, as Chair, I am one of three faculty representatives to the BOT, attend its meetings and its committee meetings and periodically report to the board.
I will make my report brief because this meeting should be devoted to celebrating the awards of our colleagues for excellence in teaching, research and service. A full statement of my report will appear in the minutes of today's meeting.
I wish to thank all of those who have helped the Senate this year, but the list would be far too long to name everyone. I especially want to thank the chairs of the standing committees for outstanding work. They are Rita Taylor, Rick Karp, Bert Huether, Michael Ma, Karen Monzel, and Larry Gilligan. I also wish to thank David Lee Smith, Mr. Service, for his supererogatory work updating the Senate's webpage.
As you know, most of the work of the Senate is done in committees and this year for the third straight year, one committee stood out in terms of both the importance of its work and the oppressive hours involvedour General Education Coordinating Committee. This Committee has met for literally hundreds of hours and is currently working on assessment issues. Its membership consists of Ann Twinam, Chair, James Boerio, Evie Brod, Glenn Markle, Tony Perzigian, David Lee Smith, Stephanie Schlagel and Pia Heyn, Program Coordinator.
To save time, let me just list some of the issues the Senate has dealt with since our last meeting in October: We passed a resolution providing for electronic balloting for All-University Faculty elections. With luck, this will be implemented next year. We passed a complex and important resolution proposing a university policy on issues of conflict of interest including potential conflicts arising out of relationships between students and faculty. After considerable discussion, we recommended that the University's Part-time Advisory Committee consider the plan to provide proportional compensation for part-time faculty that was drafted by our Part-time Faculty Committee as one option in an attempt to provide just compensation. We voted to disband the University Grading Advisory Committee and move its duties to the Academic Affairs Committee; voted to change the terms of elected officers so that they serve September 1 to August 31 instead of from July 1 to June 30; voted to recommend that student photos accompany class lists through Blackboard and voted to endorse a trial subscription to Œturnitin.com', a software plagiarism-detecting program. And we voted to designate the Chair of our Planning Committee to serve as faculty representative to the University's Capital Planning Committee. In response to the unfortunate interviews with two trustees in the News Record, the Senate voted to send copies of my report to the Senate on this matter, copies of the interviews, and of responses by the AAUP and a concerned faculty group to the Governor, BOT's, the President and Provosts along with a resolution asking that members of the BOT meet with the Faculty Senate Cabinet. The Senate also recommended adoption of policies and procedures to help students become aware of and apply for scholarships and grants and to facilitate their becoming aware of graduate school opportunities.
Many faculty are unaware of the amount of work that goes into shared governance outside of the work of the Senate and its committees. For example, this year Chair-elect, Rick Karp and I served on the Collegiate Structures Committee whose report has been given to the Provost. Rick serves on committees involved with planning the Center for Teaching and Learning and others. I regularly meet with the President's cabinet, attend all Board of Trustees meetings as well as its committee meetings, sit in on several Vice-Presidential committees, meet monthly with the President and student, faculty and alumni representatives to the BOT and meet monthly in Columbus at the Ohio Faculty Council of which I am Vice-Chair. Shared governance involves much more than just Faculty Senate meetings.
Now let me update you on some of the recent actions of the BOT that I think may be of interest to you. The Board voted to increase the annual allocation to the Foundation on the appreciation of eligible endowment funds from 1% to a range of 1.5-2% in order to help increase the growth of fund raising. It approved allocating approximately $50 million to fund projects at the Genome Research Institute on the Aventis site. It also allocated $7.2 million in local funds to help plan East Campus capital projects. In addition, this year it approved new doctoral programs in Biomedical Engineering, Planning and Neuroscience.
At a recent combined meeting of its Finance Committee and Board-Administrative Committee, attended by eight of the nine board members, the committee approved an administration plan calling for the use of $75 million of the University's endowment funds to help finance $275 million of off-campus projects. These projects would add up to 3000 student housing beds within three blocks of UC, improve retail districts and parking, and support owner-occupied housing. The largest of the projects are the Stratford Heights housing project across Clifton Avenue from the Van Wormer building, Calhoun Village North and South involving housing and retail, and Uptown Traditions along Eden Avenue. They will involve UC's partnering with private owners, either non-profit neighborhood development corporations or developer partners.
The BOT had already approved the use of unrestricted endowment funds as part of the financing of these projects of which $18 million of a planned $25 million have already been used to loan to private, non-profit Neighborhood Development Corporations. (There were only $25 million of unrestricted funds in the endowment pool.)
The joint Committee approved lending an additional $50 million of restricted endowment funds classified as fixed income investment. The loans involved will be structured so as to yield roughly the same income as the bonds that are currently in the endowment that will be liquidated to provide funds for these loans. Consequently, the income to the endowment should not be affected by these investments. The loans will vary from 10% to 25% of the projects' costs depending on building type, land costs and financing type.
Note that this mode of financing these projects was not part of the original plan. UC believed that these neighborhood corporations could obtain developers to help finance these projects. But for various reasons this market solution didn't happen. UC was also concerned about the type of retail projects planned and especially the quality of the housing that might have been constructed without our involvement. These factors led to the decision to help finance these projects out of endowment funds. If problems develop, UC can issue our own debt to pay off the existing debt and take ownership of the projects themselves.
The goal of these projects is to provide quality housing, parking, and retail outlets within a three-block ring of campus borders in order to make the University attractive to prospective students and their parents. While UC is among the safest public universities in Ohio, our enrollment suffers from the perception that the proximate neighborhoods to UC are unsafe. These projects could diminish that perception and help our recruitment and retention efforts.
I hope I've explained this planned financing correctly and clearly. My worries are twofold. First, of course, these investments, like all urban retail investments, entail financial risk. Since the loans will be structured to yield the same as the current bond portfolio, the only immediate income loss to the endowment will be the opportunity cost if we were able to purchase corporate and other paper at higher yields. On the $25 million of unrestricted funds, this could be as much as a 200 basis point difference amounting to approximately $450,000. But the real financial risk involves the ability to sell the housing units, fill the rental units and have profitable retail outlets. While the Bellevue Gardens project on Martin Luther King is planned to have 90% occupancy by this fall, currently only 27 of its 40 units are rented. Moreover, demand for these products clearly rests on the university's ability to maintain or even increase its overall enrollment. But, the demographics of our future student base argue for at least a flat future demand. For the financing to succeed there must be sufficient rental demand to allow for future rent increases. The fact that enrollment is down approximately 2000 full-time equivalent students in the last five years is not encouraging.
But my principal worry concerning our involvement in these projects does not center on their financial risk. Instead, theses massive projects added on top of the current and planned construction on UC's campuses as well as on the GRI/Aventis site will demand a tremendous amount of concentrated planning and managing from our administration and staff. We have in effect become a giant planning, financing, and contracting institution and I fear this cannot help but distract from the university's primary missions of teaching, research and service.
Report by the President of the University, Joseph Steger
President Steger began his remarks by commenting on the information presented by Chair Faaborg regarding the BOT funding plans. He said that the actions were done in response to income constraints, but primarily because of the belief that the reason we are having problems enticing students to come to UC is their perceptions of the surrounding neighborhoods. He further stated that the project is an effort to protect ourselves.
The University has set up corporations in each of the neighborhoods involved. These are basically citizen's councils that argue to city council for zone changes, etc.
The revenue streams for these projects will basically be students paying for housing in these areas. Thus far, sixteen of the fraternities and sororities have said that they would like to move into the new housing, but each chapter still needs to take a final vote. One of the main reasons they are interested in the new housing is that their present houses are too large and costly for the memberships which have dwindled from 60-80 down to 20-25 members.
All of the retail building will involve partnerships. UC will not be running the retail. Basically UC will make loans that will be paid back over time.
The administration has been carefully watching the income streams and there has not been much of a change in them. The only thing that has changed much is the loss in enrolled undergraduates. President Steger believes this can be attributed to a number of factors which are now being addressed.
Given the poor economy for the past couple of years, President Steger expressed his surprise and excitement for what the faculty of the University have done. Research has brought in approximately $200+ million dollars.
Another bright spot is that the fund raising efforts have been outstanding and this has been the best year of the past three years. We should clear $50+ million. This shows that people are investing in UC. This is especially encouraging in light of the fact that many other universities are struggling with their fund raising. Basically UC has been acting like a private institution while the state continues to be reluctant to subsidize the University.
President Steger concluded his remarks by re-emphasizing that our biggest concern right now is with enrollments and that we really need to work on enrollment and retention.
A brief question and answer period followed.
In response to a question about his personal opinion of the remarks made by some of the Board members, President Steger replied that he felt some of the faculty had taken the comments too personally. He felt the comments were a shame, and unthoughtful and that they gave a perception that the Board was not in support of the faculty and of the University. He said that he had not talked to the media because he felt it would have heightened awareness and drama. Chair Faaborg commented that Trustee Allen had called twice and was very apologetic, stating that he had not meant to say the things he said. Chair Faaborg also stated that he felt that Trustee Allen's intentions were good. He said that he had heard nothing from Trustee Herschedes.
