October 14, 2004

TO:�� Sheila Stearns

�� Commissioner

FROM:�� Rod Sundsted

�� Associate Commissioner for Fiscal Affairs

SUBJECT:�� Board Retreat � Issues for Consideration

You asked that I prepare a list of the primary issues for which guidance is needed by the Board to make planning responsive to their direction and vision.� The issues below are provided in response to your request.

Lump Sum Funding � Allocation to the Campuses

The current model used to allocate the lump sum appropriated to the Regents was developed in 1994 in response to the financial plan envisioned during restructuring.� However, much has changed since 1994.� While the model has been adjusted regularly it is not directly linked to Board priorities for the MSU.� The consensus seems to be that the allocation model needs to be significantly revamped.� Direction is needed from the Board to begin planning for the development of a new or significantly changed system of allocating funds.� Examples of questions that need to be answered include:

� What are the fundamental objectives to be achieved by the allocation?

� Should funds be directly tied to enrollment resulting in short-term volatility but immediate rewards or is funding stability an objective?

� The current allocation model is driven by institutional characteristics and resident enrollment.� Non-resident students and non-resident tuition are a significant factor in the financial health of a campus.� Should tuition, resident and/or non-resident be a consideration in the allocation?

� What is the Board�s desire regarding tuition differential?� Is there an expectation that students pay a different percentage of the cost of their education based on the institution they are attending?� If so, this needs to be a factor in the allocation.

� Should a base funding level be established for each campus that insures they can provide a quality education, maintain their facilities, and provide adequate support for students?

System-wide Data Management

The student records data warehouse is the only system-wide data management system available to the Board.�� Due to limited resources and funding the student data warehouse has never been utilized to it�s potential and the original plan to expand the data warehouse to include system-wide finance, financial aid, and human resource data has not taken place.� As a result, most requests for system-wide data are collected on a manual ad hoc basis.� As a result, this data is more susceptible to errors and inconsistencies in the data generated.� In addition, other states are now expanding data management to include employment data and social services data to better measure the effectiveness of programs.

� Is the Board satisfied with the data available when making decisions and governing the MUS?

� What data that is not readily available would be most helpful to the Board?

� Each university develops internal data systems based upon their priorities, needs, and resources available.� Does the Board wish OCHE to take a more prominent role to assure all data systems must be developed and implemented system-wide?

Human Resource Management

Human resource issues are generally managed at the campus level within broad policies established by the Board.� This frequently results in inconsistencies among campuses in the application of various personnel policies and practices.� The lack of consistency can create the potential for future liability in some instances.� For example:

� An administrative/professional position on one campus may be paid significantly more than an individual who hold a position similar or identical to that individual on another campus.

� Positions that are classified on one campus may be a Regents contract professional on another campus raising concerns of equity and fairness.�

� Employment instruments, such as Letters of Appointment, are utilized for varying purposes and for different types of employees depending on the campus.� This raises the potential for salary inequity among similar positions and may also circumvent recruitment and selection procedures.

Campus management autonomy conflicts at times with a system-wide perspective on equity and personnel decisions.� While the MUS is considered one employer, campuses desire maximum flexibility in issues of personnel management.

� What is the Board�s desire regarding the role of OCHE in human resource issues?

� Does the need for campus flexibility outweigh the risks and inequities resulting from varying campus practices?