Faculty Senate Meeting Minutes

10-4-06

 

Present:  William Randolph Franklin,  E. J. Woodhouse, Jeanne M. Keefe, Lou Gingerella, Mike Fortun, Achille Messac, Jim Napolitano, Larry Kagan, Steve Breyman, Ning Xiang, Patricia Search, Paul Hohenberg, J. Keith Nelson, Bruce Nauman, Peter Persans, Christoph Steinbruchel

Absent:  Roger Grice, Jacob Fish, Satish Nambisan, Julie Stenken, Malik Magdon-Ismail

Guests: Acting Provost Robert Palazzo, Prabhat Hajela, Bram Van Heuveln, Lester Gerhardt, Tamar Gordon, Curt Breneman

 

Approval of Minutes from 9/6/2006

Minutes were approved with one minor change.   14 approved.

 

Finance Committee Report

Presented by Planning & Resources Committee Chair, Curt Breneman

 

Professor Breneman spoke and has officially met with Ginny Gregg, VP of Finance on three occasions. Additionally, he received a briefing of the Trustees Finance Committee meeting that was held on September 8, 2006.  The complete Finance Committee report can be found at: http://trex.chem.rpi.edu/Finance%20Committee%20Report.ppt

 

He reported that this past year Rensselaer had a balanced budget (as audited by Price Waterhouse Cooper) this means that no expenditures were made other than those planned. External reporting shows approximately $10.3 million deficit which reflects the impact of Defined Benefit Pension Plan.  Rensselaer’s total assets are $1.4 billion.  Investment returns on endowment are 12.8%, which is similar to the last three years.

_____________

Rensselaer’s financial position:

Borrowing Activity: Rensselaer has $62 million in new tax exempt bonds, has restructured $213 million of existing debt to achieve more favorable rates and covenants; and borrowed $45 million in new taxable debt to fund current Rensselaer Plan initiatives and a pension plan contribution.  The blended cost of capital is 4.55% (actually making 12.8% on endowment).  Whenever the endowment was dipped into, the rate of borrowing was much lower which is the reason for the $45 million new taxable debt.  This method works well as long as cost of money remains low.

Financial position: Assets grew 8% to $1.4 billion due to strong market performance and arbitrage strategy.

Endowment: Market Values of the endowment for fiscal year 2005 were $624 million; and Market Value for fiscal year 2006 was $683 million.  Spending formula draw $28 million based upon average income of 5% drawn out on annual basis, recomputed based on market performance over period of time.

Sustainability Analysis: Recurring operating revenues continue to cover recurring fixed operating expenses and approximately half of the variable operating expenses. Rensselaer Plan is “forward funded” and additional endowment draws will take place over the next several years.

Financial Outlook for 2007: Rensselaer’s freshman class exceeded goals in size and quality which has a positive effect on our bond rating. Additionally, graduate enrollments are strong and getting stronger. Continued focus on cash flows from Capital Campaign will help maintain this effect.     Net tuition revenue is expected to be a little higher this year, although Rensselaer currently has many more freshman students than its facilities normally allow.  Rensselaer is currently at an A2/A bond rating which is in the middle of A ratings.    Historically our bond rating has been at A2 for a number of years. Last time it was A1 was 1999 when we had an austerity budget. AAA is best”, but even A3/A- is still considered “investment grade””.

Professor Nauman asked whether all major gifts were on target and if this shortfall represented of pledges that are truly short.  If not, what is the definition of the shortfall?

Professor Napolitano wanted to know if there was any feedback from the Board of Trustees after they received this information in May.  In particular what reaction or response does the Board share in terms of the bond rating?

Professor Franklin was curious about 60% error in capital campaign and asked for clarification.

Professor Breneman responded that the bond rating was not an issue because the cost to get to a better bond rating would be too high and was therefore considered not worth the cost it would take to get there.  Feedback from the finance committee is generally one or two questions. The 60% error in capital due to the timing of gifts coming in and doesn’t always span individual years. The shortfall between what is budgeted and what has been received is not representative of pledges not being met, it is new gifts anticipated but not yet received.  Gift income that is received may be recorded at different times of the year or over several years than was previously expected.  Rensselaer projected giving includes the receipt of pledged gifts as well as anticipated unpledged gifts.

Professor Nauman asked if Professor Breneman could report on the inconsistencies of the cash flow of gifts at another time.  Professor Breneman agreed.

Professor Gingerella requested that we look at the actual dollars, if operating at a loss the percentages could be a wash.

Professor Randolph asked if we were diverging based on the loss in net tuition income vs. budgeted net tuition income.

Professor Breneman responded that Rensselaer appears to be currently diverging with respect to net tuition income expectations.

 

Planning and Resources 2006 Issues being examined:


Library budget issues

Pension plan stability

Benefit sustainability

Financial management overview

Financial tracing for researchers

Programmatic resources

Other areas?

 

 Action items:  Professor Breneman requested other issues that we should look at.  Please send comments to him via email:  Brenec@rpi.edu

 

Q & A regarding Finance Committee Report

Professor Keith Nelson wanted to know what administration costs Rensselaer and what the breakdown is.

Professor Breneman reported that Institute & Academic support is 24%, he also promised to provide a breakdown.

Professor Steve Breymen questioned that the balanced budget came out to $10.3 million deficit according to external reporting, is this in addition to the 10% across the board budget cut from last year?  Does this projection mean that we will see another 10% cut next year? In terms of the gift cash flow what is the relationship to the Capital Campaign that is not a separate figure, does it reflect gifts coming through the Capital Campaign and what is not Capital Campaign? What constitutes the auxiliary 13% of our income? In terms of the figure that logs the increase from fiscal year 2005 to fiscal year 2006 increase how much of that is the return on investment (ROI) at the 8% rate and how much of that reflects new additions or gifts?  Given the arbitrage strategy what state will the endowment likely be in following the completion of the capital campaign; will it have grown or will be at the same place where we started?

Professor Breneman did not have specific information about budget cuts, but his opinion is that there may be some areas will have more cuts which are not likely to be uniform cuts.  Gift Income is a sum of all gifts, including Capital Campaign and other gifts.  Auxiliary income consists of dorms, rents, property owned, etc. What constitutes the 8% ROI rate was not clear.  Rensselaer’s cash goals are similar to what they were before the Capital Campaign. In terms of what is different between this presentation and the last one, the data has not changed significantly and therefore, no trends have changed from the last report.

Professor Napolitano requested a glossary of financial terms used in the report.

Professor Nauman asked how likely it is that the company that made the $500 million pace gift (in-kind) can take a tax deduction?  Acting Provost Palazzo responded saying that although he is not certain he understands that it is unlikely that the donor be able to take a tax deduction for the full amount of the gift.

Professor Ning Xiang asked what is in the 37% Tuition & fees (net)?  Professor Breneman responded that ‘Net Tuition’ is gross tuition minus all of our financial aid contributions which results in what students actually paid.

Professor Napolitano thanked Professor Breneman for his report.

___________________________________________

Professor Napolitano read Professor Roger Grice’s comments:

Clinical Concerns, Troy Campus

(Compiled by Roger Grice, Clinical Senator, Troy campus)

 

Clinical Faculty were not heavily involved in recent major concerns on campus; change to the defined-benefit pension plan, since few if any were enrolled in it, and the vote of no-confidence, since they could not vote. The library cuts were less of an issue than for tenure-track faculty.

 

Concerns that have surfaced recently include:

 

1.      The issue of family leave for clinical faculty as opposed to tenure track faculty.

2.      For some clinical faculty, the issue of standard definition of clinical faculty duties has been an issue—some members pushing for a more standardized definition of duties. Others, however, are happy with contracts and job descriptions tailored to what they are doing.

3.      The ability of qualified clinical faculty to serve on PhD committees and count towards the number of faculty members needed has been a concern—not only for clinical faculty, but also for tenure-track faculty and students trying to put committees together.

4.      He thinks that most people on campus believe that the vote by the full faculty to allow clinical faculty to vote was (or will be) approved by the Board of Trustees. He’s not sure how well the news that it was not approved will be received by clinical faculty and by voting faculty who were rebuffed by the Board.

 

Professor Gingerella reported that he has polled his colleagues from Hartford who were concerned that Clinical Faculty is held to a different set of standards and expectations than the Faculty Handbook (and the protection of what is contained within the Faculty Handbook) would provide.  He and his colleagues are looking forward to this going to the Board and the Board being receptive.  He added that all Hartford faculty are Clinical Faculty. He requested an amendment to define Clinical Faculty vs. Faculty.

Professor Messac asked whether Clinical Faculty can chair a committee.

Professor Gerhart responded that this issue has come up before.  Research Professors can serve on a [dissertation] committee.  However they can only chair a [dissertation] committee in concert with a tenured track faculty.  Clinical Faculty cannot chair a committee even in concert with a tenured track faculty.

Paul Hohenberg brought forth another issue asking whether a clinical faculty person with authorization can take the place of a faculty member.

Professor Bruce Nauman responded that he thought there must be four faculty members which include Research Faculty, but exclude Clinical Faculty.  He reminded the Faculty Senate that they previously voted to give Clinical Faculty voting rights. In order to give Clinical Faculty additional rights additional motions are required. He also stated that the definition of ‘Faculty’ is in Handbook not in the Faculty Senate Constitution.

Professor Napolitano read the **CURRENT WORDING** in the Faculty Senate Constitution:

II.A.i. For the purposes of Senate business, the term "Faculty" includes persons having the title Professor, Associate Professor, Assistant Professor, Research Professor, Research Associate Professor, Research Assistant Professor, Librarian, Archivist and Assistant Archivist, and also includes those retired from these positions.

Professor Lester Gerhardt read the following definition from the ’06 – ’07 Rensselaer catalog:

Doctoral Committee

The chair of the student’s department assigns a temporary adviser to guide the student until a doctoral committee can be appointed. As soon as the student has chosen a dissertation area, he or she must arrange to conduct the dissertation work with a dissertation adviser who is a full-time tenure-track member of the faculty. The dissertation adviser then consults with the chair of the student’s department regarding the nomination of a doctoral committee of at least four members. The department chair sends the nominations to the Office of Graduate Education, which approves the doctoral committee.  The committee must include at least four full-time tenure-track Rensselaer faculty members. One committee member must be outside the student’s department. Where special circumstances exist, an individual who is not a tenured or tenured-track Rensselaer faculty member may be approved as one of the four committee members, or as an additional fifth member from outside the university. In each case, the individual must receive prior approval by submitting curriculum vitae to the academic department chair, and to the Dean of Graduate Education. The committee members represent the principal areas

included in the student’s Plan of Study. They assume responsibility for this plan and also for the student’s candidacy and final examinations.

 

Professor Napolitano stated that what faculty voted on last spring (2006) was an amendment to the Constitution of the Faculty Senate, which did not address modifications to the handbook or catalog.  Research and Clinical Faculty according to the handbook are and would be different according to the definition contained therein.

Professor Woodhouse recommended that faculty who wish to serve on a dissertation committee could submit a C.V. to Chair of Dean and systematically utilize the above mentioned clause to gain experience of the process.  If enough do so and the experience proves unexceptionable, it would likely be easy to make the change.

Professor Fortun felt that the vote was a much more general vote, that as a result of last years vote when using the term “faculty” it included Clinical, Research, Tenured, etc.

Professor Persans stated that any changes to the Faculty Senate Constitution must be approved by the Board of Trustees.

Professor Hohenberg suggested that as a faculty we should be very positive about clinical faculty as many of us benefit greatly from what Clinical Faculty do in our departments.  This represents a first step and a way to restore and bring some dignity and recognition to Clinical Faculty.

Professor Nauman stated that a change in who is allowed to vote does not require a change to the Faculty Senate Constitution.  It requires a motion by the Faculty Senate stating that votes by clinical faculty be solicited, counted and pooled with all other votes in any elections, polls or other ballots conducted under the auspices of the Faculty Senate.

Professor Breymen asked what the downside could be of permitting Clinical Faculty to vote in faculty elections.

Professor Napolitano responded saying that he feels that he was remiss during a meeting this summer with the Board Chair when he met with Sam Heffner before the Board and FSEC met with him.  At that time Sam asked, if Jim was sure the Faculty Senate really wanted this change.  Jim said he should have unequivocally said ‘yes’; and wants now at the very least is fix mistake and say this is what we want.

Acting Provost Palazzo recalled a time when he was at a university where faculty felt that massive recruitment in Clinical Faculty resulted in a lowering in number of tenure track faculty thereby impacting the culture dramatically.   If that is what Sam is referring to there is cause for concern.  As Acting Provost he will protect tenure track faculty lines and numbers which he feels should grow.  In his discussion with the President he believes she is aligned with that philosophy. 

Professor Breyman asked Acting Provost Palazzo to confirm that there is currently not a policy at Rensselaer to substitute the Clinical Faculty for tenure track faculty.

Acting Provost Palazzo:  Confirmed that there is no policy to substitute Clinical Faculty for tenure track Faculty, in fact there have been efforts to elevate the tenure track positions.

 

Professor Nauman presented the following motion regarding Clinical Faculty:

 

By means of a letter to the Chairman of the Board, request that the Board of Trustees endorse the amendment to the Constitution of the Faculty Senate that was passed by an 88% majority of the faculty in the Spring, 2006 semester.

 

Professor Larry Kagan seconded amendment.

Vote on amendment:  13 in favor; 0 opposed; 0 abstentions

 

Professor Nauman presented these additional motions regarding Clinical Faculty:

1.       Resolve that votes by clinical faculty be solicited, counted and pooled with all other votes in any elections, polls or other ballots conducted under the auspices of the Faculty Senate.

2.       Resolve that clinical faculty be accorded all rights, privileges and duties accorded other faculty to the extent that such rights privileges and duties are defined in the Constitution of the Faculty Senate and are under the jurisdiction of the Faculty Senate.

3.       By means of a letter to the President, request that the Administration grant clinical faculty all fringe benefits offered to the tenure-track faculty.

Professor Breymen recommended that Professor Nauman’s motions (listed above) be tabled and given to Planning and Resources.

Professor Nauman stated that only the one with fringe benefits belongs in the Planning and Resources committee.

Professor Kagan stated that there could be resource and academic implications from these motions, therefore an Ad Hoc committee should be charged to get input from the Provost and VP of Finance.

MOTIONS: All three motions were seconded, and tabled for further discussion by FSEC over the course of the year. The motion regarding benefits (#3 above) was seconded by Ned Woodhouse; while Professor Persons seconded #1 & #2 as listed above.

____________________________________

Recording of Minutes:

There was a brief discussion about what should be included in the minutes. The committee agreed that the minutes should contain pertinent information that will be paraphrased unless a statement was actually quoted at which time quotations will appear.  The committee also acknowledged that the minutes are distributed prior to the “approval of minutes” vote and can therefore be corrected as needed prior to such approval at the meetings.