Meeting Minutes - May 2002

Minutes of the Meeting of the Board of Regents of the University System of Georgia
Held At 270 Washington St., S.W., Atlanta, Georgia
May 7 and 8, 2002

CALL TO ORDER

The Board of Regents of the University System of Georgia met on Tuesday, May 7 and Wednesday, May 8, 2002, in the Board Room, room 7007, 270 Washington St., S.W., seventh floor. The Vice Chair of the Board, Regent Joe Frank Harris, called the meeting to order at 1:00 p.m. on Tuesday, May 7. Present on Tuesday, in addition to Vice Chair Harris, were Chair Hilton H. Howell, Jr. and Regents Hugh A. Carter, Jr., Connie Cater, William H. Cleveland, Michael J. Coles, George M. D. (John) Hunt III, Allene H. Magill, Elridge W. McMillan, Martin W. NeSmith, Wanda Yancey Rodwell, J. Timothy Shelnut, Glenn S. White, Joel O. Wooten, Jr., and James D. Yancey.

ATTENDANCE REPORT

The attendance report was read on Tuesday, May 7 by Secretary Gail S. Weber, who announced that Regent Donald M. Leebern, Jr. had asked for and been given permission to be absent on that day. She explained that Chair Hilton H. Howell, Jr. would be present.

APPROVAL OF MINUTES

Motion properly made and duly seconded, the minutes of the Board of Regents meeting held on April 16 and 17, 2002, were unanimously approved as distributed.

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SPECIAL PRESENTATION: FISCAL YEAR 2002 REGENTS' AWARDS FOR ACADEMIC EXCELLENCE

Vice Chair Harris called upon the Senior Vice Chancellor for Academics and Fiscal Affairs, Daniel S. Papp to present the Regents' Awards for Academic Excellence. Dr. Papp would introduce the award recipients while Vice Chair Harris and Chancellor Meredith presented the awards.

Dr. Papp explained that this is the fifth year that the Regents' Teaching Excellence Awards have been presented. They recognize both individuals and programs for excellence in teaching and service to students. This is the third year that the Regents' Research in Undergraduate Education Awards have been presented. They are presented to individuals and students who excel in the emerging area of the scholarship of teaching and learning. Dr. Papp recognized Dr. Dorothy Zinsmeister, Senior Associate for Academic Affairs, who served as the coordinator and chair of the awards program.

The first award was a Regents' Teaching Excellence Award for faculty in two-year and state colleges. This year's recipient was Dr. Timothy L. Rhoads, Assistant Professor of Biology at South Georgia College ("SGC"). Dr. Rhoads joined the faculty of SGC in 1997, where his success in instruction demonstrated an ability to accomplish extraordinary things with limited resources. He blends traditional teaching with modern technology to provide an outstanding learning environment for students. Dr. Rhoads does not confine his educational efforts to the classroom. As chair of the SGC Retention Task Force, he works to improve student advising, mentoring, and career counseling as well. He serves as faculty advisor to the Environmental Awareness Club and participates in community outreach programs such as the Postsecondary Readiness Enrichment Program ("PREP"), the Science Olympiad, and Sigma Z Young Scientist Mentoring program.

Dr. Kenneth S. Sajwan, Professor of Biology at Savannah State University ("SSU"), was the winner of the Regents' Teaching Excellence Award at the regional and state universities level. Dr. Sajwan joined the faculty of SSU in 1992 and has since distinguished himself with a collection of teaching awards and accomplishments, including the White House Millennium Award for Teaching and Research Excellence at Historically Black Colleges and Universities, which he received in 2001. In 1999, he received the international award for Innovative Excellence in Teaching, Learning, and Technology. In 1998, he was named the Regents' Distinguished Professor of Teaching and Learning at SSU. According to Joseph H. (Pete) Silver, Sr., Vice President for Academic Affairs at SSU, "Dr. Sajwan has earned the respect of the entire campus community with his enthusiasm, pleasant disposition, boundless energy, and total commitment to his students... He has an uncanny ability to motivate, challenge, and inspire his students to excel in all settings."

Dr. Timothy M. Renick, Associate Professor of Philosophy and Director of Religious Studies in the Department of Philosophy at Georgia State University ("GSU"), was the winner of the Regents' Teaching Excellence Award at the research university level. A faculty member since 1986, he has built GSU's Religious Studies program from the one-person operation it was when he arrived to flourishing bachelor and master's of arts programs in Religious Studies. The programs are among

the most sought-after options in the curriculum at GSU. In addition to building the Religious Studies program, Dr. Renick is also a committed teacher. Dr. Ronald Henry, Provost and Vice President for Academic Affairs, praises Dr. Renick's mentoring of students, his willingness to work one on one with large numbers of students, and his provision of detailed personal feedback needed for scholarly growth. This effort in particular has helped him place his undergraduate students in graduate programs at the most prestigious universities around the country.

Dr. Linda Medleau, Professor of Dermatology in the Department of Small Animal Medicine of the College of Veterinary Medicine at the University of Georgia, was also a winner of the Regents' Teaching Excellence Award at the research university level. Dr. Medleau joined the faculty of the College of Veterinary Medicine in 1984 and has earned a number of prestigious teaching awards, including the Josiah Meigs Award for Excellence in Teaching in 2000. She knows that there is a lot more to being a good teacher than just simply being a stimulating lecturer. She is also enthusiastic and encouraging in the classroom and the clinic. Dr. Medleau has said, "I teach my students through example that by thinking positively, working diligently, and not giving up, one can transcend any limitation, whether it is physical or emotional, obvious to others or invisible, and this together can lead to a fulfilling life." An alumna said, "Dr. Medleau is an amazing individual because she has and continues to make valuable contributions to veterinary medicine as a clinician, a researcher, and especially as a teacher...."

Dr. Papp explained that the next award was also a Regents' Teaching Excellence Award, but this award was for a program at one of the regional and state universities, specifically to the School of Nursing in the College of Health and Professional Studies at Georgia Southern University ("GSOU"). In attendance to accept the award were Dr. Jean Bartel, Chair of the School of Nursing and Professor of Nursing, and Dr. Fred Whitt, Dean of the College of Health and Professional Studies. The School of Nursing has embraced the concept and practice of continuous improvement, the success of which is underscored by national and state recognition of its graduates. Retention rates for the Bachelor of Science in Nursing ("B.S.N.") program average above 86% per class, and the average licensure pass rate for the last five years is 91%. In 2001, the Georgia Board of Nursing recognized the B.S.N. program as a model program in the state. In addition to focusing on student success, the School of Nursing has effectively embraced instructional technology to improve the geographic range and effectiveness of its programs. It has also incorporated distance learning and other instructional techniques that are especially appropriate for the rural mission of the program.

The Department of Oral Rehabilitation in the School of Dentistry at the Medical College of Georgia was awarded the Regents' Teaching Excellence Award for a program at a research university. In attendance to accept the award were Dr. Kevin B. Frazier, Associate Professor of Oral Rehabilitation, and Dr. W. Franklin Caughman, Chair of the Department of Oral Rehabilitation. The success of the Department of Oral Rehabilitation at MCG can be easily demonstrated. For example, the pass rate of its students on the National Dental Board examination has ranked the program between first and twelfth nationally over the past nine years. Similarly, 95% of students in the program completed the Doctor of Dental Medicine degree within five years of enrollment. The department's 2001 graduating class has a 100% on-time graduation rate. Faculty commitment to teaching quality and student learning is enhanced in the program through peer evaluation, course redesign, identifying and mentoring at-risk students, student self-assessment programs, state-of-the-art simulation laboratories, and innovative pedagogy. These strategies, coupled with collaborative faculty efforts in teaching and prominent links between rewards and good teaching, have resulted in a department that focuses its energies on student improvement.

Next, Dr. Papp presented two Regents' Research in Undergraduate Education Awards. The first was awarded to Dr. Sarah Robbins, Associate Professor of English at Kennesaw State University ("KSU"). Dr. Robbins joined the faculty of KSU in 1993 and has distinguished herself through a number of nationally recognized and innovative projects that represent pioneering work in the scholarship of teaching and learning. She was the 1998 recipient of the Constance Rourke Prize awarded by the American Studies Association for the best article of the year in American Quarterly. At KSU, Dr. Robbins was the 1997 recipient of the Scholar as Mentor Award and the 2001 recipient of the President's Award for Community Engagement. Among Dr. Robbins' many accomplishments is the Kennesaw Mountain Writing Project. In this project, she moves her students from seeking answers to questions about teaching a particular class to forging organized opportunities for collaboratively investigating, learning, and sharing the results of those studies with professional colleagues.

The second Regents' Research in Undergraduate Education Award was presented to the R.N. to B.S.N. Online Completion Program of the School of Nursing in the College of Health and Human Services at KSU. In attendance to accept this award were Dr. Beverly Farnsworth, Professor of Nursing and Coordinator of the Distance Learning R.N. to B.S.N. Program; Dr. Janice Flynn, Assistant Professor of Nursing; and Christine Horne, Associate Professor of Nursing. The R.N. to B.S.N. Nursing Completion program at KSU has implemented a successful Internet-based program for place-bound registered nurses to complete a baccalaureate degree in nursing. This program incorporates instructional technology into nursing education and is a completely online degree program that students receive enthusiastically. Program faculty researched the effectiveness of the online program and found that online students performed measurably better that graduates of the traditional program. Further research revealed that online students believed that their courses were more comprehensive and involved a higher level of thinking skill than on-campus courses. The scholarship of assessing online teaching and learning that they developed is now a model for assessing online education in a number of different locations and areas.

Dr. Papp said that this concluded the awards presentation. He remarked that this is one of the high points of the academic year and asked the Board to join him in congratulating the winners.

On behalf of the Board of Regents, Vice Chair Harris congratulated the award recipients. He remarked that the Board was very proud of them.

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SPECIAL PRESENTATION: MEDICAL COLLEGE OF GEORGIA

Vice Chair Harris called upon the Chancellor to introduce the next presentation.

Chancellor Meredith said that he was delighted to introduce President Daniel W. Rahn of the Medical College of Georgia ("MCG") and Mr. Donald F. Snell, Chief Executive Officer of MCG Health, Inc. ("MCGHI"), who would be discussing the vision they have for MCG and MCGHI. He remarked that MCG is a very good medical college, but it has not yet met its potential. With the input of many people, President Rahn has been developing a vision to bring MCG up to a level that will make it competitive with some of the best academic medical centers in the country, but it will take some investment and perseverence. The Chancellor stated that President Rahn is the man to lead that charge and that the Regents would be excited about the vision he would present to them at this meeting.

President Rahn thanked Chancellor Meredith and the Board for inviting him to this meeting to talk about his vision for the future of MCG. The strategic planning process actually predated his presidency, which began in June 2001. In fact, in 1998, the vision for the future of MCG was the focus of the Medical College of Georgia Blue Ribbon Commission (the "Blue Ribbon Commission") chaired by the late Regent Thomas F. Allgood, Sr. At that time, it was decided that the clinical system of MCG should be restructured and placed under the management of a nonprofit corporate entity, MCGHI, in association with MCG. In addition, the advancement of MCG as a research university was declared a high priority for the University System of Georgia. A goal was set to move MCG into the second quartile of the nation's medical schools because medical schools are the anchors of health science universities in terms of research productivity. A few months later, a legislative study commission was formed that examined the same issues, came to the same conclusions, and added one additional element, which was the recommendation of the formation of the Georgia Medical Center Authority ("GMCA"), which is chaired by President William Bloodworth of Augusta State University. The purpose of GMCA is to facilitate commercialization of discoveries at MCG. How to grow the research enterprise was a prominent topic of discussion during the search for a new president of MCG. As an incoming president, Dr. Rahn was charged with the responsibility of developing a strategy for how to move MCG up the ranks of the nation's health science universities in terms of research productivity. More recently, the Washington Advisory Group ("WAG"), in its capacity as a consultant to the University System, identified MCG as an opportunity for expansion of biomedical and biotechnology research and an opportunity for expansion of commercialization of discovery through technology transfer but noted that additional resources will be necessary in order to capitalize on that potential. So, that is the context in which President Rahn entered MCG. A second context, of course, was a revitalized clinical system, which Mr. Snell would discuss further. There was also the MCG early retirement plan, approved by the Board of Regents in August 1999, which provided both a challenge and an opportunity to repopulate the faculty of the institution in a way that would enable it to move toward a new vision. MCG has filled three dean positions and still has a large number of faculty positions to fill. This presents an opportunity to chart a strategic plan and a facilities master plan in the context of a restructured academic health sciences university in order to position MCG to move up the ranks of research universities.

President Rahn said that MCG's mission is to improve health and reduce the burden of illness on society by discovering, disseminating, and applying knowledge of human health and disease. MCG is a special-purpose university devoted solely to the health sciences, and it has five schools: the School of Allied Health Sciences; the School of Dentistry, which is Georgia's only school of dentistry; the School of Graduate Studies, which grants advanced degrees in the biomedical sciences; the School of Medicine; and the School of Nursing. MCG offers academic programs in 45 disciplines and recently conferred 640 degrees, most at the graduate level. MCG is structured the way most academic health science centers are structured. There are an academic enterprise, the university itself; a health system comprised of MCGHI, which has the responsibility for management of the facilities associated with the health system; and an academic group practice, the Physicians Practice Group ("PPG"), through which the physicians provide their professional services. PPG and MCGHI jointly comprise the health system that supports the mission and purpose of the overall university. Both of these are structured as nonprofit entities, and both are cooperative organizations of the University System.

MCG's total enrollment is approximately 2,000 students, reported President Rahn. In addition, there are 426 dental and medical residents. Of the students, 92% are Georgia residents representing 129 counties. However, 99.6% enrolled in the School of Medicine -- all but three -- are Georgia residents, and 100% of those enrolled in the School of Dentistry are Georgia residents. What happens educationally at MCG has a profound impact on the quality of health services provided throughout the state. Twenty-three percent of the currently licensed physicians, approximately 3,500, and one-fourth of practicing dentists, more than 1,000, in Georgia are graduates of MCG. Each of them contributes to the health and well-being of their communities. They also are generally among the major contributors to the economy of their regions.

MCG's admissions have increased approximately 5% to over 16,000 students, stated President Rahn. Emergency room visits have increased 9% to over 60,000 a year. Outpatient visits are approaching 400,000 this year, and there are about 5,500 operative cases annually. All of these have been increasing since the restructuring of the clinical system, and Mr. Snell would discuss this further. In addition, there has been quality improvement: the mortality rate has decreased, while patient satisfaction has increased. President Rahn stated that MCG cannot be a world-class health science university without a world-class clinical system that supports its academic mission. The University System of Georgia estimates that MCG contributes $716 million annually to the Georgia economy. The Georgia Hospital Association estimates MCG's economic contribution at $787 million. MCG and MCGHI combined employ over 7,300 employees. The return on investment of state funds is in excess of ten to one.

President Rahn stated that his vision is for MCG to become one of the nation's premier academic health science universities. On the academic side, that is defined by educational accomplishments, accreditation, attainment of students, and research productivity. For purposes of this presentation, he would focus on research productivity, because one of the major challenges is to address how MCG can move up the ranks as a research university. President Rahn reiterated that MCG has been engaged in a strategic planning process since before he came to the institution. It has linked its strategic planning to its facilities master planning process with the intention that the facilities master plan will support the strategic plan. MCG has to get into the top 50 medical schools nationally in order to achieve preeminence as a research university. The anchor of a health science university is its school of medicine. The best quality indicator is that school's research productivity, and the best benchmark of productivity is peer-reviewed, competitive funding coming from the National Institutes of Health ("NIH"). These rankings are conducted on an annual basis. So, MCG has set a goal of getting into the top 50 by focusing on diseases of importance to Georgia and thematically organized research linking patient care, clinical trials, translational research, and basic research at the bedside, focusing on cancer, cardiovascular diseases, neurological diseases, infection and immunity, biomedical technology, and diabetes. Currently, MCG is ranked eighty-second of 122 medical schools that participate in ranking. The University of North Carolina, Chapel Hill, is ranked fourteenth nationally in NIH funding with $180 million annually; the University of Alabama, Birmingham, is ranked seventeenth with $160 million; the University of Virginia is ranked thirty-sixth with $82.3 million; and the University of Florida in Gainesville is ranked forty-eighth with $62.5 million. MCG received $23.6 million in NIH funding, so in order to move up the ranks, it must receive approximately 2.5 times the NIH funding it currently receives. Of course, he noted, that baseline continues to move up.

NIH funding represents approximately 55% of MCG's total research funding, said President Rahn. The remainder comes from foundations, industry, and other sources. In 1997, MCG received $18.8 million in total funding. When the Blue Ribbon Commission rendered its recommendations in 1998, MCG was at $25.6 million. From 1999 to 2000, MCG increased its funding by 25%, and from 2000 to 2001, funding increased by 28%. MCG is on track for continued increase this year, but not of that magnitude, in part due to transitions associated with the early retirement plan. If MCG wants to move up the ranks nationally, it must steadily increase its funding while the baseline also moves up. President Rahn projected that to move up the ranks, MCG will have to set an aggressive target of about 20% increase per year. If MCG achieves this goal, it could reach $108 million by 2007.

The principal problem is not that faculty are not productive, said President Rahn. Research productivity of basic science faculty and clinical productivity of clinical faculty exceed the benchmarks of comparator institutions, many of which have higher research productivity. The primary difference is that the faculty is small in numbers. The main way MCG can build its research capacity is to recruit talented faculty. It must recruit research faculty who are already highly successful where they are and offer them an opportunity to be more successful here in Georgia. The Georgia Research Alliance ("GRA") is an entity that greatly helps MCG in this regard, but there are relatively few GRA eminent scholar positions. President Rahn stated that MCG must recruit approximately 25 research faculty members each year. To do that, it must have start-up salary dollars and increased square footage devoted to laboratory research. There are extensive benchmarks for how to do that, and they are part of what drives the facilities master plan. If MCG can recruit successful faculty members, they will bring research funds with them. Nonetheless, this will require incremental investment of approximately $110 million over the next five years to fuel this kind of development over and above the funds currently available. If MCG achieves this through the recruitment of successful faculty over time, it would have a research engine generating $60 million annually over and above current revenues. So, there is the discovery process, the impact on health and science, and also the direct economic impact. These are funds that currently go to other states rather than Georgia. This also has an employment impact on the state because, on average, every $50,000 to $60,000 of research revenue contributes to one new job. So, increased funding of $60 million translates into increased employment by 1,000 individuals. MCG needs a sizeable investment over a five-year period, but this must be referenced against the economic engine that would be created at the end of that period of time. In order to achieve this, everyone must work together. The benefits to the State of Georgia are increased funding, increased direct revenue, a greater return on investment of public funds on an annual basis, and the impact on health-related quality of life and diseases of importance to the people MCG serves. The quality of educational programs and clinical services are directly related to the research on campus. Nationally, those institutions that are the leaders in research are also the leaders in clinical service and education. These missions do not compete with each other but, rather, create synergy. In order for this to happen, there must be a clinical system that works in concert with the academic campus in terms of growth of the whole program. There must be a world-class clinical system in order to have a world-class research and educational enterprise. Mr. Snell would be discussing the vision for the future of the clinical system. Then, President Rahn would present the MCG facilities master plan during the meeting of the Committee on Real Estate and Facilities as a Committee of the Whole.

Mr. Snell greeted the Board and said that he began managing the clinical system in 1999. The reorganization began very modestly, but the MCGHI board, including many Regent members, has put forth a vision for MCG to become one of the top 25% of academic medical centers in the United States and to be one of U.S. News & World Report's top-ranked hospitals among other quality indicator goals by 2005. The MCGHI board, with its establishment on July 1, 2000, developed a strategic plan with nine original initiatives. Now, there are ten strategic initiatives to get MCG into the top 25%. The first initiative is promotion of clinical quality. Most national rankings are based on clinical quality parameters, such as mortality and complication rates. What differentiates an academic medical center from a community hospital is quality. So, the promotion of clinical quality is absolutely paramount to MCG's success. The second initiative is health system integration and development. MCGHI inherited a lot of pieces of the clinical system, but the goal is to get those pieces together to operate in a smooth, seamless system. The third initiative is aggressive cost repositioning. Unfortunately, at the outset, the MCG hospital and clinics were the second worst performer of academic medical centers in the country. They were the second most expensive and had the worst staffing pattern and the highest days in accounts receivable among other issues. At that time, MCG was wrestling with a $25 million deficit. At that rate, the deficit would have likely increased to $55 million by 2003. So, a lot of the work has been and will continue to be aggressive cost repositioning. The fourth initiative is completion of the continuum of care. MCG is very good

in specialty services. What it has not historically had are things on the front end of medicine, such as prevention and wellness, and on the back end, like home health and hospice. Healthcare is a journey through a continuum, and an academic medical center with the comprehensive nature that MCG has must have everything from "cradle to grave." The fifth initiative is the development and promotion of clinical centers of excellence. MCGHI realized when it drafted its first strategic plan that MCG could not be all things to all people. So, MCG is concentrating in Southern centers which align nicely with the research centers of which President Rahn had spoken. There are centers in children's health, neuroscience, oncology, women's health, and gerontology, among others.

Like any good business, information systems are going to be a key enabler for MCG to get where it needs to be, said Mr. Snell. Unfortunately, the beginnings were very humble. While the campus was ranked among the top 100 most "wired" organizations in the nation, from a clinical systems perspective, there was very little hardware and software attached to that network. So, the sixth initiative is evaluation, selection, and installation of enterprisewide information systems, both patient access systems and clinical information systems. The seventh initiative is indigent care management. Last year, MCG delivered $113 million in indigent care and saw patients from all 159 Georgia counties. MCG will continue to work with the state to develop a more rational system in terms of provision of care to the indigent. The next two initiatives are strengthening relationships with the community and broadening the delivery network to fuel the three missions of MCG: patient care, academic, and research. These missions are all dependent on increasing the numbers of patients coming into the system. It is critical that MCG increase market share and attract a wider variety of patients. The last initiative is promotion of proactive customer service strategies. One of the historical criticisms of MCG was that it was not a very customer-friendly environment. MCG is working very hard to be competitive with other academic medical centers on customer service strategies.

Mr. Snell next discussed what it will take to get MCG into the upper quartile. First, it will take continued improvement in operating margin, cash flow, and operating efficiencies. The first year after the establishment of MCGHI, MCG did a $47 million turnaround. A $25 million deficit became a $22 million, or about 6%, operating margin. The top performers have operating margins in the neighborhood of 12% to 14%. So, the work in this area is not yet done. The budget that the MCGHI board would soon consider calls for an 8% operating margin in a very difficult economic environment. MCG started out with $10.7 million in cash, which is only about 14 days' worth of operating expenses. It now has over $100 million in cash, but it will need to increase this. It will also need to improve operating efficiencies. MCG was the second-highest staffed organization in the country, but it is beginning to operate more efficiently. MCG will also need to continue implementation of support systems and technology. The U.S. News and World Report weighs technology heavily in its scoring system. MCG must provide for technology that would not be available anywhere else in the state. MCG has some technologies, such as the Gamma Knife®, but it must continue to acquire leading-edge technologies. MCG must also have an intense focus on clinical quality and outcomes. Many rankings are based on mortality and complication rates. MCG has dropped its mortality rate from 1.38% to 1.05%, a 33% drop in mortality the first year. However, the top institutions operate at 0.75% to 0.85%, so MCG must continue to improve in this area. MCG must also focus on patient satisfaction, because all of the ratings take this into account. MCG must also develop world-class programs and facilities; recruit world-class faculty, leadership, and support personnel; and continue to change its organizational culture. The real difficulty is taking an organization that has traditionally been managed by the state and turn it into a world-class academic medical center.

Mr. Snell next presented the facilities plan of MCGHI, which will complement the MCG facilities master plan to be presented next. The MCGHI board approved the MCGHI plan in concept approximately six months ago. MCGHI will have to modify its facilities in order to help MCG get into the top quartile. Many of the buildings are very modern. The Children's Medical Center is only two years old. The Ambulatory Care Center and the Specialized Care Center are about 15 years old. However, the main patient care building, the Talmadge Building, was built in 1955, and the Sydenstricker Building was built in the 1970s. Any time there is a renovation, the entire facility must be brought up to code, so the MCGHI facilities plan calls for a total renovation of the Sydenstricker Building. As it continues to grow, MCGHI will build a new tower and faculty building to complement the campus. (Mr. Snell showed the Regents a picture of what the campus would like with these renovations and additions.) The cost of this over a ten-year period of time would be $352 million. The MCGHI board has approved this conceptually and will return to this plan as it examines the building phases. In closing, Mr. Snell asked whether the Regents had any question or comments.

Regent McMillan asked whether the NIH rankings correlate with other kinds of rankings.

President Rahn responded that elite medical institutions in terms of research productivity are also generally the ones with the best reputations educationally and clinically. So, there is a general correlation. The institutions that excel in reputation and research productivity are a magnet for faculty who actively participate in pushing the frontiers both clinically and in research and translating that into new clinical and educational programs. Such institutions graduate the kinds of students who stay to become faculty members or practice in the state.

Chancellor Meredith added that as the institution becomes financially successful, it will generate overhead dollars that will allow it to make investments to improve programs. In this way, there is a very good correlation.

President Rahn stated that one of the reasons to focus on federal research dollars is that federal research grants are accompanied by facilities and administrative revenue as well. For example, a $100,000 research grant might bring with it a 44% indirect cost recovery rate, which means the institution will receive $44,000 in addition to the $100,000 to pay for the infrastructure that is necessary to support the research enterprise. The main difference between an elite institution and

MCG is not the quality of the work of the individual faculty members, but rather it is the size of the overall operation. MCG has excellent core facilities and excellent programs, but they are small. Therefore, MCG's faculty are engaged more in other activities. There must be an expanded research enterprise, which in effect will pay for itself by generating soft money and has the potential for biotechnology business development associated with the discoveries that are made.

Regent Shelnut said that living in Augusta, he has had the opportunity to work with President Rahn and Mr. Snell. He assured the Regents that there are some very exciting things going on at MCG in addition to what they had heard at this meeting. Turning a $25 million deficit into a $22 million profit is a great job. MCG is already recruiting some of the best medical professionals in the industry. As this vision continues to unfold, the Board can be proud of the fact that MCG is going to be one of the best clinical and academic medical universities in the country.

President Rahn stated that MCG has just completed the recruitment of leadership in the area of anesthesiology, and there are three physicians coming from Harvard University and Massachusetts General to fill other leadership positions. Their recruitment funds were derived from the profit margin of the clinical system. In creating the clinical system, the parties developed a margin-sharing agreement such that 40% of the operating margin is transferred in the final audit of each fiscal year to the president for use in supporting academic program development. So, MCG now has access to venture capital for academic program support and development that comes directly from the clinical system. The two entities are absolutely wired together.

Chancellor Meredith noted that Regent Leebern serves as the chair of the MCGHI board and Regents Cleveland, NeSmith, and Shelnut are also on the board. The Deputy to the Senior Vice Chancellors, Margaret Taylor, serves in place of the Chancellor when he cannot attend MCGHI board meetings.

President Rahn noted that he is also a member of the MCGHI board, as are the dean of the School of Medicine, the chair of PPG, and a number of community members.

The Chancellor commended the MCGHI board for the incredible turnaround of the institution.

Regent Cleveland remarked that he was impressed with the world-class faculty who are coming to Augusta. He asked what is the likelihood that MCG will be able to recruit that same kind of talent for its current vacancies and what else would be needed to accomplish that.

President Rahn responded that if candidates will come visit the campus, they can generally be recruited. Through the Institute for Molecular Medicine and the Vascular Biology Center among others, MCG has been able to create thematically organized research programs that draw on certain core operations that are superb. When potential faculty come and see these programs, they are attracted. In order to continue to draw research-oriented faculty, however, MCG will need more facilities. MCG has received the funding for a new research building, for which it will soon be breaking ground. However, it must stay ahead of the curve. For example, MCG will need to build a cancer research building. It needs to be ahead of the curve in facilities and continue to have funds that can support the start-up. MCG needs funds to finance the start-up costs associated with new programs. MCG is also partnering with the University of Georgia to develop a research agenda in cancer, and it needs to develop partnerships across the University System in order to draw on existing areas of strength.

President Rahn added that MCG presents great potential for economic development. The economic difficulties in Georgia really are overshadowed by difficulties in other states, which presents an opportunity to recruit quality faculty and achieve some gains. People are aware of MCG's turnaround, its vision of excellence, and the GRA's and University System's support. There are faculty who are interested in learning about the opportunities at MCG.

Vice Chair Harris thanked the presenters for this portion of the program.

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COMMITTEE ON REAL ESTATE AND FACILITIES, "COMMITTEE OF THE WHOLE"

Vice Chair Harris then convened the meeting of the Committee on Real Estate and Facilities as a Committee of the Whole. He then turned the Chairmanship of the meeting over to Regent Hunt, the Chair of the Committee.

Chair Hunt explained that the Committee would be hearing a presentation on the facilities master plan of the Medical College of Georgia ("MCG"). He then called upon President Daniel W. Rahn to begin the presentation.

President Rahn introduced Mr. Jerry Cooper of the firm Cooper Carry, Inc., who would present the facilities master plan recommendations to the Committee. He reminded the Regents that the master plan is developed in the context of the institution's vision for the future as a research university aligned with a world-class clinical system. The metrics and goals that he had reviewed with the Regents in his presentation on the vision and future of MCG are what fed into the development of this plan.

Mr. Cooper said that he would be discussing how the vision and strategic plan for MCG are manifested in the facilities master plan. Augusta has long been the state's center of medicine and continues to be so. MCG is located in Augusta on 15^th Street. Mr. Cooper asked President Rahn to tell the Regents how MCG partners with its neighbors.

President Rahn said that one of the unique features of MCG's geographic location is that it is located alongside a large community health system, University Hospital, which is a nonprofit county authority hospital with which most of the community physicians are affiliated. Also near MCG are a rehabilitation hospital, the main campus of the two-campus Augusta VA Medical Center, and many private physicians' offices. The area targeted for the development of a research park by the Georgia Medical Center Authority is adjacent to MCG, and a neighborhood identified for redevelopment is just down the street. The whole area really constitutes a medical center. MCG and MCG Health, Inc. ("MCGHI") together have over 7,000 employees inside this area. There are over a million patient visits a year to the area; MCG's admissions are about 16,000. This is really the economic engine of this region of the state.

Mr. Cooper stated that the area is circumscribed in a fixed way. MCG has a fair amount of open space, most of which is used for parking lots. So, the density of development is relatively low compared to the average urban college. Before the MCGHI split, the total complex had 3.9 million square feet. Now, MCG itself has 2 million square feet. The consultants have performed due diligence on all of the buildings on campus, and they have concluded that 50% of them are obsolete. Mr. Cooper discussed the configuration of the campus, pointing to the buildings on a map. He explained that the consultants met with the administration of MCG numerous times and they also met with members of the community, planners for the health systems master plan, and City of Augusta officials. They recommend creating a tree-lined, heavily landscaped area to help differentiate MCG from its hospital neighbors. They also recommend developing Laney Walker Boulevard into a more pedestrian-friendly street. Without enlarging the right-of-way, they suggest creating parallel parking on either side of the street and making brick sidewalks and roadways to slow down the traffic and make it possible to cross the street with greater ease. This would also bring the campus closer together. In addition, they recommend creating a promenade to some of the other facilities to create an entry to MCG and connecting it such that patients do not have to enter the campus from 15^th Street. He said that one of the problems on many campuses and hospitals is that people do not know where to go from the parking lot. This is an attempt to deal with that issue.

Pointing to a campus planning map, Mr. Cooper showed the Regents possible locations where the new research facility, wellness center, allied health facility, and cancer center would be built by 2007. By 2012, Laney Walker Boulevard would be developed to create quadrangles leading to a proposed auditorium and connecting with the boulevard. He showed the Regents how this would look to someone entering the reconfigured campus. He then asked whether the Regents had any questions or comments.

Seeing that there were no questions, President Rahn again stated that it is important to have a world-class academic health science university and medical center as a component of the University System of Georgia. Thomas Jefferson once said that health and education are the foundations of democracy. As the state's public health sciences university, MCG sits at the intersection of both. It is critically important, he said, that the Board aggressively pursue a world-class vision for MCG.

Chair Hunt commended Mr. Cooper and President Rahn on their presentation and turned the floor back to Regent Harris.

At approximately 2:15 p.m., Vice Chair Harris adjourned the Board into its regular Committee meetings.

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CALL TO ORDER

The Board of Regents of the University System of Georgia met again on Wednesday, May 8, 2002, in the Board Room, room 7007, 270 Washington St., S.W., seventh floor. The Chair of the Board, Regent Hilton H. Howell, Jr., called the meeting to order at 9:00 a.m. Present on Wednesday, in addition to Chair Howell, were Vice Chair Joe Frank Harris and Regents Hugh A. Carter, Jr., Connie Cater, William H. Cleveland,, George M. D. (John) Hunt III, Elridge W. McMillan, Martin W. NeSmith, Wanda Yancey Rodwell, J. Timothy Shelnut, Glenn S. White, Joel O. Wooten, Jr., and James D. Yancey.

INVOCATION

The invocation was given on Wednesday, May 8 by Regent Harris.

ATTENDANCE REPORT

The attendance report was read on Wednesday, May 8 by Secretary Gail S. Weber, who announced that Regents Michael J. Coles, Donald M. Leebern, Jr., and Allene H. Magill had asked for and been given permission to be absent on that day.

Chair Howell thanked Regents Wooten and Yancey, President Frank D. Brown, and the people at Columbus State University ("CSU") and in the City of Columbus for hosting the April 29 and 30 tour of CSU, the downtown location of the Schwob School of Music at the recently opened River Center for the Performing Arts, and the Total System Services campus. He remarked that the visit was outstanding.

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SPECIAL PRESENTATION: UPDATE ON GEORGIA TECH REGIONAL ENGINEERING PROGRAM

Chair Howell introduced President G. Wayne Clough of the Georgia Institute of Technology ("GIT") and Dr. James David Frost, Associate Professor of Civil Engineering and Director of the Georgia Tech Regional Engineering Program ("GTREP"), to make a special presentation to the Board on the growth and success of GTREP.

President Clough greeted the Regents and thanked them for this opportunity to share about GTREP. The concept for GTREP germinated in 1994 or 1995. When President Clough first came to GIT, he was invited to speak to a number of groups in the Savannah and Statesboro area, and in the process, he learned from business and education leaders that they felt there was a real need for access to engineering education in that part of the state, particularly from an economic development standpoint. The business community expressed that it would like GIT to be involved if possible because of its experience in engineering and the reputation of its programs. Parents and prospective students echoed this feeling. President Clough shared this information with then Chancellor Stephen R. Portch and the Board. At this time, he wanted to share a bit about the context for GTREP. First, the program is consistent with the mission of GIT. That is, GIT has a mission to provide statewide access to quality engineering education. Associated with this mission is economic development, which is addressed through the Economic Development Institute ("EDI"), which is based at GIT and has 17 offices around the state. Since before the establishment of GTREP, GIT has had a successful ongoing program called the Regents Engineering Transfer Program ("RETP"). The objective of RETP is to allow many institutions in the state to feed students into GIT at the junior and senior levels after those schools provide the basic curriculum at the freshman and sophomore levels. There are 13 schools who participate in RETP around the state. Two of the steady suppliers of students to RETP had been Georgia Southern University ("GSOU") and Armstrong Atlantic State University ("AASU"). Savannah State University ("SSU") had also brought some students to the program, but the other two schools have always been particularly strong participants. GIT felt there was a great opportunity to use the existing collaborative relationships that had been established through RETP and also capitalize on its efforts through EDI. President Clough noted that President Bruce F. Grube from GSOU and Dr. William Megathlin, Special Assistant to the President, from AASU were present at the meeting, and he thanked them for their partnership in GTREP. He said that SSU has also been a participant in GTREP, and although it has not brought as many students to the program, he hopes it will grow into that role.

President Clough explained that in 1998, Chancellor Emeritus Portch commissioned a study to decide whether there was a demonstrable need for engineering education in the southeast region of the state. Indeed, the study showed that there was a need for on-site delivery of engineering education in that region. The basis for going forward with the establishment of GTREP was that it would be a collaborative effort from the beginning. There were wonderful institutions in the region, including the Skidaway Institute of Oceanography ("Skidaway"), which was an underutilized resource in the state that could be brought into the partnership as an educational and research resource. There was also a clear indication that the program should be focused toward economic development. Not only does the program intend to educate, but it also intends to have those students gain employment in the region after they graduate. So, the participants worked closely with the Savannah Economic Development Authority ("SEDA") in what was then called the Business, Education, Technology Alliance ("BETA"). It is now called Coastal. The participants also worked with Gulfstream Aerospace Corporation ("Gulfstream"), a very powerful economic industry in the area. Of course, the EDI office was already in the area. In 1998, Yamacraw was also coming online. This presented a great opportunity for AASU, GSOU, and SSU to participate, and this could also be a resource for educational activity. Combined with the Advanced Technology Development Center ("ATDC"), which is the state's high-tech business incubator operated by GIT and working closely with Yamacraw in commercialization of technologies. GIT is in the process of franchising ATDC in other locations, such as Columbus and Savannah.

The guiding principles of GTREP were based on the Board's strategic plan, explained President Clough. GIT, as part of the partnership, would do what it has always done; that is, provide junior, senior, and graduate level education for students. The other institutions in the partnership would provide the core curriculum at the freshman and sophomore levels. Over time, this would blend, but this was the starting point because this king of collaboration already existed in RETP. The program was built to optimize regional economic development opportunities, and facilities would be developed with the understanding that GTREP would have a hub and spoke kind of arrangement. This would be a location that would help drive economic development in other areas. The hub concept was important because it emphasized the notion that this is truly a collaborative partnership. President Clough asked Dr. Frost to bring the Regents up to date on the rapid growth of GTREP. He thanked Dr. Frost for doing a superb job in a challenging situation because there are five institutions and a number of cities involved. There is lot of diplomacy to be done in addition to developing these things in a very high-quality way.

Dr. Frost thanked President Clough. He said through GTREP, the Board has engineered a success story in Southeast Georgia. In fall 2002, there will be three undergraduate programs offered through GTREP. In addition to Civil Engineering and Computer Engineering, there will also be an Electrical Engineering program offered as part of an Intellectual Capital Partnership Program ("ICAPP®") partnership between the GTREP institutions and Gulfstream. The program will be focused on aviation electronics in an effort to address hiring difficulties at Gulfstream. At the graduate level, GTREP has always recognized the opportunity to take advantage of online master's programs in a number of disciplines already offered at GIT, including Civil and Environmental Engineering, Electrical and Computer Engineering, and Mechanical Engineering. GTREP is enhancing these programs with on-site delivery of a number of classes and labs. The next phase of GTREP will involve the addition of an undergraduate degree in Mechanical Engineering and perhaps both undergraduate and graduate programs in Industrial Engineering. These would round out the fairly full spectrum of engineering programs offered through GTREP.

Dr. Frost said that GTREP had approximately 100 students during its first year, and this coming fall, GTREP has anticipated enrollments of approximately 360 students. There are also approximately 200 students in lower division classes who are taking courses at the partner institutions in hopes of meeting the admissions criteria. The faculty have also grown during this time. By this fall, there will be 18 faculty directly involved in the program in Southeast Georgia. This does not reflect the significant Atlanta-based faculty who complement the program. This fall, 32 different engineering courses will be taught in Southeast Georgia. The total number of faculty is also increasing. This is important because it means an increased number of on-site courses. In addition to spaces available on the partner campuses, there will be approximately 30,000 gross square feet of leased space at the Chatham Center for the actual hub that houses GTREP.

In December 2001, GTREP graduated its first eight graduates, five of them with honors. Dr. Frost stressed that the GTREP honors are on the same scale as GIT honors. GTREP students perform on par and sometimes better that students on the GIT campus. One of the GTREP honor students graduated with a 4.0 grade point average. Four of the GTREP graduates took the Engineer in Training ("EIT") exam in fall 2001, and all four passed. Five of the graduates are now working in Southeast Georgia. This demonstrates that the program is doing what it set out to do for the region. One of the graduates is now in a GTREP graduate program and another has applied. The eighth student accepted an engineering job in South Carolina. Seven more students have since graduated in May 2002. The performance of the students enhances the process of the Accreditation Board for Engineering and Technology ("ABET"). Both the GTREP Computer Engineering and Civil Engineering programs are going to be evaluated by ABET in October 2002 alongside the GIT campus-based programs.

Next, Dr. Frost discussed the infrastructure and technologies being used by GTREP. For example, GTREP takes advantage of the Georgia Statewide Academic and Medical System ("GSAMS"), but it comprises only a small part of GTREP course delivery. GSAMS addresses the classroom-to-classroom issue, but delivering a program like GTREP requires a lot more. GTREP classrooms are designed to provide instructors and students with seamless high-quality interaction between sites. In addition, faculty keep students posted on class assignments and exam schedules using a wireless Palm Pilot network. This is but one example of how GTREP anticipates trends in technologies to offer anytime, anywhere education. It is not that these technologies are nice supplements to the program, but rather, they are critical to its operation. GTREP has developed what it calls interactive group study rooms that are used for multiple purposes. The rooms have Internet connections with an Internet meeting configuration so that a connection is established between a faculty office at a remote location and that room. The student can knock on the door to that room, and the faculty member at the other site can say, "Come in." This essentially extends faculty offices to other sites so that faculty can effectively conduct office hours no matter the geographical difference. GTREP is about much more than classrooms. There are other areas in which technology is helping deliver the programs. In its first year, GTREP used the services of Federal Express to deliver class materials

and assignments back and forth from Atlanta. Now, there is technology such as digital senders that create digital files and send them. Students can now submit homework directly to a faculty member on the GIT campus even if it is handwritten. Now, there are even tactile screen palates that allow a faculty member to open up that homework file, write on the computer screen with a special pen, resave the document, and send it back to the student. This greatly enhances interaction between the faculty member and the student. GTREP is also, obviously, making use of the World Wide Web, where there exists a virtual student center. Technology provides these critical resources to ensure the desired quality of the programs. There are also student workrooms at the participant campuses where students can interact with each other across an Internet configuration that allows them to interact across campuses. Students may have small class sizes, but they can interact with colleagues at other campuses to enhance the academic environment.

GTREP's research activities have also started to ramp up, reported Dr. Frost. Some of the research going on is clearly related to the fact that GTREP is located in a coastal region. For example, one of the faculty members is involved in a project that examines the near-shore impact of offshore dredging. There are a number of faculty who are looking at and developing educational technologies. There are also faculty working on technology for civil engineering field reconnaissance following disasters. Initially, this work addressed the aftermath of earthquakes, but last year, one of the faculty members was among eight faculty members in the nation funded by the National Science Foundation to do reconnaissance at Ground Zero following the September 11, 2001, attacks. Faculty are doing both cutting-edge and high-profile research. That is critical to how GTREP is perceived nationally.

Dr. Frost stated that construction will soon begin on a permanent hub facility for the program at the Crossroads Business Center on the northwest side of Savannah. SEDA owns the 170-acre business park, part of which it wants to use as its Technology and Engineering Campus ("TEC"). SEDA is gifting approximately 47 acres of the park to the University System for the benefit of GTREP. (In January 2002, the Board of Regents authorized a memorandum of understanding with SEDA for the construction of this facility.) This location will create a very high-profile facility that will help attract industry to Southeast Georgia. It is close to Savannah International Airport and Gulfstream. It is beside I-95, so it has good visibility for the 30,000 cars that drive by daily. Plus, by being on the north side of Savannah, it is closer to GSOU. This makes it more convenient for the participating institutions. The value of the property that SEDA is gifting to the University System is approximately $2.4 million. In addition, the Department of Transportation committed $1.35 million for the pavement and sidewalks in the area. The City of Savannah has contributed approximately $1 million in water and sewer extensions, bringing those utilities into the center of the site. Finally, Savannah Electric Power Company, BellSouth, and Atlanta Gas Light Company have also made commitments of approximately $1.3 million in utilities infrastructure.

Dr. Frost next discussed GTREP's projected enrollment growth. He explained that by fall 2010, it is anticipated that the program will serve approximately 1,600 total students. He stated that such growth puts challenges on the infrastructure both at the hub and at the partner campuses. Essentially, the hub will need to grow in a number of phases because much of the growth will take place in the early days to accommodate existing students. Over time, the need for physical facilities will level off as existing facilities become better utilized. For phase I, fall 2003 to summer 2005, GTREP will need to grow its space at the hub facility and similarly through subsequent phases. By phase IV, from 2009 to 2019, the relative increase in the hub facility space will be much smaller. In addition to the hub facility, there will also be a need for approximately 10,000 gross square feet of space for EDI, ATDC, and Yamacraw. Dr. Frost noted that the budget for that space would come from somewhere else or just pass through the University System budget process. For example, ATDC companies are responsible for their own lease. Phase I facilities needs include an addition of 104,000 gross square feet, including the EDI, ATDC, and Yamacraw space. The proposal to meet that need included the GTREP Collegiate Center, an approximately 17,000-gross-square-feet facility. As part of its memorandum of understanding, the Board appropriated and approved $5 million for this project, including some soft costs. The purchase and sale agreement is pending. Phase I will also require leasing facilities of approximately 87,000 gross square feet. GIT will be requesting Board approval to lease this needed space. Dr. Frost reminded the Regents that GTREP has been in 30,000 gross square feet of space at the Chatham Center, which is almost twice the space of the proposed GTREP Collegiate Center. So, GTREP is definitely suffering with space issues. He noted that the bids recently closed on the GTREP Collegiate Center, and he showed the Regents the design developed by the Brookwood Group for the project. It is a single-story building with a variety of classrooms, labs, and office space. There will be a satellite dish to help address the need for communications. Dr. Frost discussed the layout and intended uses of the proposed space. He said that the program has benefitted not only from the vision of the Board in establishing it and the collaboration of the partners, but also from the tremendous support of the community. GTREP wants to ensure that its first facility will impress all of the stakeholders in the program. With that, Dr. Frost turned the presentation back to President Clough.

President Clough explained that the master plan for the GTREP hub campus consists of two parts: core academic buildings and two leased buildings or facilities provided by collaborative business partners. The objective of having two buildings is to create more flexibility for the use of those buildings. Either way, a third party would build those buildings for GTREP at TEC. He said that leased space is not the optimal solution for GTREP, as it would certainly be preferable to have System-owned space on the campus. On GIT's five-year capital list is a proposed $25 million building that would be a permanent building to address GTREP's growth needs. In closing, he said that GTREP has been on track and consistent with work that has come from the partner institutions, the University System Office, and the Board of Regents. It has followed the Board's strategic plan and has been consistent with the goals from the beginning. It takes advantage of the institutions in the area to optimize the synergy of the five partner institutions, including Skidaway. It uses technology to the maximum advantage of the student, but it recognizes the need for person-to-person contact. Finally, it is designed to drive economic development in the region. GTREP is already closely aligned with industry objectives in the area. The Chancellor, the Assistant Vice Chancellor for Development and Economic Services, Annie Hunt Burriss, and others are working with the Department of Industry, Trade and Tourism on a major economic development initiative, and the private partner is very interested in GTREP and would rely on graduates of GTREP to supply its workforce needs. It is very important for the private partner that this initiative move forward. President Clough asked whether the Regents had any questions or comments.

Regent NeSmith noted that there was originally skepticism about the viability of putting engineering programs in Southeast Georgia. He thanked President Clough for sending Dr. Frost to head GTREP. He is very intelligent and enthusiastic, and the program has really boosted the region and has greatly improved access to quality engineering programs. Most importantly, four recent graduates are now working in the region, which has historically had trouble attracting graduates from high-quality engineering schools. So, this has been very good for Southeast Georgia, and he thanked them for putting together such a good program.

President Clough noted that GTREP also serves the needs of many nontraditional students because of the Army base and Kings Bay. As young people come out of the military, many of them are coming into GTREP.

Regent Yancey asked about the retention rate of GTREP students compared to students on the campus of GIT.

Dr. Frost responded that there are different retention rates at different levels within the program and even from the different partner institutions that reflect the different backgrounds of the students. For example, students who come into the program from AASU are nontraditional students who are typically in their mid to late 20s. Their retention rate from the sophomore to junior levels are in the high ninetieth percentile because they have reached a point in their lives where they are more motivated and dedicated. In contrast, at GSOU, where the students are traditional students, many students come in thinking engineering is the field they want to pursue, but they sometimes change majors. So, their retention rates are much more consistent with those of students on the main GIT campus. When students at the main campus decide they do not want to study engineering, they often leave because there are not many other options at GIT. However, on the GSOU campus, even if a student decides not to pursue engineering, he or she can go into one of a variety of other fields because of the broader offerings, including science or engineering technology.

President Clough said that he was very pleased with the GTREP retention rate.

Chancellor Meredith stated it was exciting to hear about this program, and he thanked President Clough and Dr. Frost for their outstanding work. He said that this demonstrates the value of the University System in addressing state needs. He said that this is what it is all about, and he thanked all of the presidents involved for their cooperative efforts. He noted that on Monday, May 6, 2002, President Clough received the National Engineering Award from the American Association of Engineering Societies. Chancellor Meredith said that he and the Regents are very proud of President Clough, his accomplishments, and the leadership he provides to GIT.

President Clough noted that the GTREP model is transportable to other parts of the state as the need arises. GTREP has already collaborated with the RETP program at Valdosta State University ("VSU") to deliver certain undergraduate courses that are not available at VSU but are necessary for the GIT component of RETP. This allows the students in RETP at VSU to graduate sooner and get more acclimated with engineering before they arrive at the GIT campus.

Chair Howell agreed that this is exciting for the System. He said that he hoped that all economic development efforts are successful and that GTREP will help prove the validity of the economic development efforts of the System. He hopes that the State of Georgia and the Board will do whatever they can to help this program.

After this special presentation, Chair Howell asked the Regents for their Committee reports.

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AUDIT COMMITTEE

The Audit Committee met on Tuesday, May 7, 2002, at approximately 11:10 a.m. in room 7005. Committee members in attendance were Chair Connie Cater, Vice Chair Glenn S. White, and Regents George M. D. (John) Hunt III, Martin W. NeSmith, and Joel O. Wooten, Jr. Also in attendance were Regent Hugh A. Carter, Jr. and Chancellor Thomas C. Meredith. Chair Cater reported to the full Board on Wednesday that the Committee had reviewed three items, none of which required action. Those items were as follows:

1. Information Item: Status of Fiscal Year 2002 Audit Plan

The Associate Vice Chancellor for Internal Audits, Ronald B. Stark, evaluates the status of the University System of Georgia audit plan each quarter. The campus-based auditors submit quarterly reports on the statuses of their individual plans and their resource utilization. Their information is consolidated with information from the University System Office Internal Audit Department. At this meeting, Mr. Stark presented the consolidated status of the fiscal year 2002 University System of Georgia audit plan as of March 31, 2002. Mr. Stark noted that attrition had exceeded 5,000 hours and had impacted completion of audit plans at several institutions as well as the University System Office.

Committee members expressed their concern that some campus-based auditors report to their respective chief business officers rather than the presidents. Chancellor Meredith assured them that this would be changed.

2. Information Item: Fiscal Year 2003 Audit Plan

Each year, the Associate Vice Chancellor for Internal Audits prepares an audit plan for the University System of Georgia. This plan is developed by requesting input from the Regents, University System Office audit managers, and the institutions. A matrix of the responses from all parties is prepared, and then, risk factors are determined and institutions are selected to be audited. The scope of the audit coverage is determined using a risk-evaluation process. Audit resources are then allocated cognizant of the coverage provided by the Georgia Department of Audits and Accounts and the audit plans of the 13 institutions with internal audit departments. The campus-based auditors prepare their audit plans based on an institutional risk-assessment process. Their plans are discussed and approved by the respective institution's president and the Associate Vice Chancellor for Internal Audits, Ronald B. Stark. At this meeting, Mr. Stark presented the full audit plan for the University System of Georgia for fiscal year 2003, including coverage provided by the Board of Regents audit staff and the campus-based auditors.

3. Executive Session

At approximately 11:40 a.m. on Tuesday, May 7, 2002, Chair Cater called for an Executive Session for the purpose of discussing a personnel issue. With motion properly made and variously seconded, the Committee members who were present voted unanimously to go into Executive Session. Those members were as follows: Chair Connie Cater, Vice Chair Glenn S. White, and Regents George M. D. (John) Hunt III, Martin W. NeSmith, and Joel O. Wooten, Jr. Also in attendance were Regent Hugh A. Carter, Jr., Chancellor Thomas C. Meredith, and President Carlton E. Brown of Savannah State University. In accordance with H.B. 278, Section 3 (amending O.C.G.A. § 50-14-4), an affidavit regarding this Executive Session is on file with the Chancellor's Office.

At approximately 12:05 p.m., Chair Cater reconvened the Board meeting in its regular session and announced that no actions were taken in Executive Session.

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COMMITTEE ON FINANCE AND BUSINESS OPERATIONS

The Committee on Finance and Business Operations met on Tuesday, May 7, 2002, at approximately 3:35 p.m. in the Board Room. Committee members in attendance were Chair James D. Yancey, Vice Chair J. Timothy Shelnut, and Regents Connie Cater, George M. D. (John) Hunt III, Glenn S. White, and Joel O. Wooten, Jr. Board Chair Howell was also in attendance at this meeting. Chair Yancey reported to the Board on Wednesday that the Committee had reviewed four items, all of which required action. With motion properly made, seconded, and unanimously adopted, the Board approved and authorized the following:

1. Approval of Changes to The Policy Manual, Section 704 Tuition and Fees

Approved: The Board approved changes to Section 704 of The Policy Manual, effective May 8, 2002.

Background: Beginning last year, the University System Office began a process of updating The Policy Manual of the Board of Regents. The purpose of this effort is to eliminate outdated language and procedures and modify policies that place unnecessary burdens upon institutions. Institutional presidents were asked early on in this process to identify policies that needed to be changed.

The changes proposed for Section 704 Tuition and Fees were reviewed extensively by chief business officers throughout the University System of Georgia and by staff at the System and institutional level. In addition, the recommendations were shared with University System presidents in April 2002. The major proposed changes to Section 704 Tuition and Fees are summarized as follows:

The section has been reorganized and renumbered to improve sequencing of related policy provisions.
Definitions have been added to clarify meaning and purpose and to include cross-references to other relevant sections of The Policy Manual. For example, definitions are provided for "in-state tuition" and "out-of-state tuition" with reference to the Board's residency policy.
Approval requirements for elective fees have been changed such that Chancellor approval is required only for housing and food service fees, while other elective fees (user fees and special charges) may be approved under the authority of institutional presidents. Institutions will be required to report all mandatory and elective fees annually to the Board of Regents.
A provision has been added to recognize the authority of institutional presidents to set fees for noncredit courses as described in Section 503 of The Policy Manual. (This reflects existing practice but formalizes that practice by including it in the tuition and fees policy).

Section 704.014 Professional Program Tuition has been added to state that only nationally competitive graduate and professional programs would qualify for differential tuition rates under the policy. This reflects the original intent to make tuition rates for select graduate and professional programs comparable to competing programs in peer institutions across the country.

A provision has been added which grants the Board authority to approve special tuition rates for distance learning courses and programs should an institution seek to obtain that approval. This is a departure from current policy but reflects the positive outcome of using special rates for the e-Core and WebM.B.A. programs. The new rates would not be differentiated by residency status. Additionally, this applies only to distance learning courses and programs in which 95 percent or more of class contact time is delivered by a distance technology.
New language has been added to allow institutions to prorate mandatory fees on a per credit hour basis for students enrolled for less than 12 credit hours. Like the existing provision, which gives institutions the authority to waive mandatory fees for students enrolled for fewer than six credit hours, this new provision is permissive.
New language has been added to include "tuition" in the existing payment deferral provisions. This change is necessitated by elimination last year of the terms "matriculation fees" and "nonresident fees" in favor of "in-state tuition" and "out-of-state tuition".
A new provision has been added to allow waiver of out-of-state tuition for students who are legal residents of bordering states and who enroll in Board-approved external centers. The nonresident students must live in out-of-state counties which border on Georgia counties in which the external center is located. Current policy restricts the out-of-state tuition waiver to nonresident student enrollment in institutions located in counties contiguous to out-of-state counties.
A new provision has been added to allow waiver of out-of-state tuition for nonresident students enrolled in an Intellectual Capital Partnership Program ("ICAPP®") Advantage program.
The waiver of mandatory fees, exclusive of technology fees, for certain categories of students (Section 704.042) is clarified as an optional decision for institutions. A new provision allowing for waiver of mandatory fees for students enrolled exclusively in distance learning courses has been added.

Sections of The Policy Manual which are proposed to be revised are as follows. Please note that the strike-through texts represent deletions from the current version and highlighted texts represent additions.

704 TUITION AND FEES

~~704.01 AUTHORIZATION AND PAYMENT~~

~~704.0101 APPROVAL AND STRUCTURE~~

704.01 TUITION

Although tuition and fees charged students of the University System normally shall be approved by the Board of Regents, institutions may implement special technology fees on a pilot basis. Institutions choosing to establish such fees may submit a proposal for approval from the Chancellor prior to implementation. Proposals must have the support of affected students and must demonstrate program quality enhancement and competitive need. Before any pilot program becomes permanent, it would need the explicit approval of the Board of Regents.

Tuition shall be defined as payment required for credit-based instruction and related services and shall be charged to all students. Tuition rates for all University System of Georgia institutions and programs shall be approved annually by the Board of Regents at its April meeting to become effective the following fall semester. Exceptions to this requirement may be granted upon recommendation of the Chancellor and approval by the Board of Regents. Tuition for both undergraduate and graduate students enrolled at an institution within the University System of Georgia shall be charged at the full rate for students enrolled for 12 credit hours or more and at a per credit hour rate for students enrolled for less than 12 credit hours. ~~and at the same rate for 12 or more credit hours.~~ Distance education courses and programs as defined in Section 704.01 may be exempted from this policy and charged on a per credit hour basis.

Out-of-state tuition at all University System institutions shall be four times the tuition rate charged to Georgia residents. In addition, the Chancellor is authorized to approve institutional requests for special pilot programs for waiving the tuition differential. The Chancellor shall evaluate such requests in light of good public policy and the best interests of students. If a pilot program is successful, the tuition program shall be presented to the Board for consideration.

704.011 IN-STATE TUITION

In-state tuition shall be defined as the rate paid by students who meet the residency status requirements as provided in Section 403 of The Policy Manual.

704.012 OUT-OF-STATE TUITION

Out-of-state tuition shall be defined as the rate paid by students who do not meet the residency status requirements as provided in Section 403 of The Policy Manual. Out-of-state tuition at all University System institutions shall be established at rate that is at least four times the tuition rate charged to Georgia residents. University System of Georgia research universities may request increases in out-of-state tuition rates based on the tuition levels of peer or benchmark institutions.

704.013 GRADUATE TUITION

The tuition rate for all University System graduate programs shall be at least 20 percent higher than the base tuition rate for undergraduate programs. The regular graduate tuition rates normally shall be charged to all graduate students; however, where a graduate student is classified as a research, teaching, or graduate assistant, the institution may waive the graduate tuition or waive the differential between in-state and out-of-state graduate tuition.

704.014 PROFESSIONAL PROGRAM TUITION

Board approval shall be required for differential tuition rates for nationallycompetitive graduate and professional programs, as deemed appropriate by the institution based on the academic marketplace and the tuition charged by peer institutions with similar missions. An institution seeking such approval from the Board shall provide the Board with an impact analysis and a plan for enhancing the quality of the program.

704.015 TUITION FOR DISTANCE LEARNING COURSES AND PROGRAMS

Board approval is required for special tuition rates for distance education courses and programs should an institution seek to charge special rates. Notwithstanding other provisions in Sections 704, rates shall apply to all students regardless of residency status and shall be no less than the standard in-state tuition rate approved for the offering institution. For the purposes of this policy, distance learning courses and programs shall be defined as those courses and programs in which 95 percent or more of class contact time is delivered by a distance technology.

704.016 TUITION AGREEMENTS WITH CORPORATIONS, ORGANIZATIONS, AND OTHER LEGAL ENTITIES

University System of Georgia institutions may enter into agreements with customers (defined as corporations, organizations, agencies, or other legal entities) for the delivery of credit courses and programs. The course/program delivery shall be restricted to members of the customer group and their dependents, except upon agreement between the institution and the customer to permit nonmembers or nonemployees to enroll in courses/programs on a space-available basis. The amount institutions may charge for the course/program delivery shall be agreed upon between the institution and the customer, such that the total cost shall represent the reasonable and fair market value of the instruction and provided that the charges are not less than the total direct and indirect costs to the institution for the delivery of instruction and related services. Such costs may include, but are not necessarily limited to, course development, direct instruction, textbooks, consumables, noninstructional services, hardware, software, and indirect costs such as administrative overhead, maintenance, and security.

Institutions shall be required to report annually to the Chancellor regarding these agreements.

The charges agreed upon between the institution and the customer shall be assessed to the customer on a per seat, per student, or per agreement (flat-rate) basis.

704.17 POSTSECONDARY OPTIONS PROGRAM TUITION REIMBURSEMENT WAIVER

University System of Georgia institutions shall waive the portion of tuition representing the difference between the amount of the state reimbursement for the Postsecondary Options (PSO) program and the total cost of tuition, as approved by the Board, for the students enrolled in the program.

704.02 ~~CLASSIFICATION~~ STUDENT FEES AND SPECIAL CHARGES

~~A. MANDATORY FEES. Mandatory fees must be paid by all students unless waivers are specifically approved by the Board of Regents. There are two categories of mandatory fees:~~

~~1. Fees mandated by the Board of Regents for all University System students; and~~

2. Fees mandated by the institution and approved by the Board of Regents for all students at the individual institution, such as activity fees, athletic fees, health fees, and transportation fees.

ELECTIVE FEES. Elective fees are established by the institution, approved by the Chancellor or his/her designee, and paid by the students who elect and/or benefit from the specific services. Examples of elective fees are residence hall rentals, food service, post office box rentals, residence hall activities, and special class fees, such as applied music fees.

C. ~~PENALTY CHARGES. Penalty charges are established to discourage undesirable practices and must be paid according to the schedule established by the institution.~~

704.021 MANDATORY STUDENT FEES

Mandatory student fees are defined as fees which are paid by all students as required by the Board of Regents or as required by the institution subject to approval by the Board of Regents. Mandatory fees shall include, but not be limited to, intercollegiate athletic fees, student health service fees, transportation or parking fees (if the latter are charged to all students), student activity fees, and technology fees. All mandatory fees shall be approved by the Board of Regents at its meeting in April to become effective the following fall semester. Exceptions to this requirement may be granted upon recommendation of the Chancellor and the approval of the Board of Regents.

An institution may waive mandatory fees for students who are enrolled for fewer than six credit hours. Alternatively, institutions may prorate mandatory fees on a per credit hour basis for students taking less than 12 credit hours. Institutions may elect to reduce Board-approved mandatory fees for students enrolled in summer courses.

Proposals to increase mandatory student fees and proposals to create new mandatory student fees, submitted by an institution shall first be presented for advice and counsel to a committee at each institution composed of at least 50 percent students. Students shall be appointed by the institution's student government association.

All mandatory student fees collected by an institution shall be budgeted and administered by the president using proper administrative procedures, which shall include the advice and counsel of an advisory committee composed at least 50 percent students. Students shall be appointed by the institution's student government association. All payments from funds supported by student mandatory fees shall be made according to approved business procedures and the appropriate business practices of the institution (BR Minutes, 1999-2000, p. 364).

704.022 ELECTIVE FEES AND SPECIAL CHARGES

704.0223 HOUSING FEES

Housing fees are defined as fees paid by students who elect to live in institutional residential facilities. All housing fees shall be approved by the Chancellor or his/her designee in April of each year. Exceptions to this requirement may be granted by the Chancellor if warranted by special circumstances.

704.0224 FOOD SERVICE FEES

Food service fees are defined as fees paid by students who elect to choose a institutional food service plan. All food service fees shall be approved by the Chancellor or his/her designee in April of each year. Exceptions to this requirement may be granted by the Chancellor if warranted by special circumstances.

704.0225 OTHER ELECTIVE FEES AND SPECIAL CHARGES

Other elective fees and special charges are defined as those fees and charges which are paid selectively by students. These fees and charges may include, but are not limited to, resident hall deposits, penalty charges, non-mandatory parking fees and parking fines, library fines, laboratory fees, post office box rentals, and course fees. Institutional presidents are authorized to establish and adjust these fees, as appropriate. Institutions shall be required to report to the Chancellor annually on all such fees and any adjustments made thereto under procedures established by the Vice Chancellor for Fiscal Affairs and Treasurer.

704.0226 CONTINUING EDUCATION FEES

Institutional presidents shall be authorized to establish fees for noncredit-hour courses and programs as defined in Section 503 of The Policy Manual.

~~704.0102~~ 704.03 TUITION AND FEE PAYMENT AND DEFERRAL

All tuition and fees (mandatory and elective fees) are due and payable upon registration. Exceptions to the time of payment are as follows:

An institution may defer tuition and fees up to the amount authorized for a specific academic term for students whose fees are guaranteed and will be paid by an outside agency under a documented agreement with the institution.
An institution may defer tuition and fees up to the amount of the aid granted for a specified academic term for students who have an institution-administered loan or scholarship in process.
An institution may defer tuition and fees up to the limit stated in the certificate or other document for a specified academic term for foreign students who have a certificate or other acceptable documented evidence that payment ~~of fees~~ will be made after a statement of charges from the student has been presented for payment.

~~704.03~~ 704.04 ~~TUITION DIFFERENTIAL AND FEE WAIVERS~~ OUT-OF-STATE TUITION WAIVERS AND WAIVER OF MANDATORY FEES

~~704.0301 FEE WAIVERS~~

An institution may waive the health service and student activity fees for students who initially registered during any academic term for fewer than six credit hours or who are attending classes which meet fewer than two calendar days per week or for other special institutional circumstances approved by the Board (BR Minutes, 1968-69, pp. 506-7; 1982-83, p. 124).

In addition, each institution must adhere to the following guidelines in establishing policies and procedures governing select student fees for those students who may be studying on other campuses or be located away from their home campus for various reasons.

a. Students who reside and/or study on a campus other than their "home institution" should pay the select fees of the institution at which they are residing or studying, entitling them to the services made available by that institution. They should not be required to pay fees at their "home institution."

b. Students enrolled at off-campus centers should pay a select off-campus fee for services made available at the center, if applicable. Additional campus-based fees, such as health and athletic fees, should be optional and elective for these students.

c. Students participating in practicum experiences (e.g., student teachers) and internships who are located over 50 miles from their home institution should not pay any select fees other than those prescribed by their home institution as directly related to the practicum experience. Additional campus-based fees, such as health athletic fees, should be optional and elective for these students.

d. Institutions may enter into mutual agreements that provide clearly articulated services to students at locations other than the students' home institutions. For services made available beyond the mutual agreement, the host institution may charge a special fee.

e. If an institution can clearly demonstrate that adherence to any of these guidelines would place undue hardship on that institution, it can request that the Chancellor grant it an exemption to the guideline.

~~704.0302~~ 704.041 OUT-OF-STATE TUITION ~~DIFFERENTIAL~~ WAIVERS

An instituion may waive out-of-state tuition and assess in-state tuition for:

Academic Common Market. Students selected to participate in a program offered through the Academic Common Market.

A. Nonresident students who are financially dependent upon a parent, parents or spouse who has been a legal resident of Georgia for at least twelve consecutive months immediately preceding the date of registration, provided, however, that such financial dependence shall have existed for at least twelve consecutive months immediately preceding the date of registration;
International and Superior Out-of-State Students. Up to two percent of the institution's full-time enrollment for superior out-of-state students in selected programs and/or international students, as selected by the president (BR Minutes, 1984-85, p. 372; March, 1996, p. 47); International students and superior out-of-state students selected by the institutional president or an authorized representative, provided that the number of such waivers in effect does not exceed 2 percent of the equivalent full-time students enrolled at the institution in the fall term immediately preceding the term for which the out-of-state tuition is to be waived.
University System Employees and Dependents. Full-time employees of the University System, their spouses, and their dependent children;
Medical/Dental Students and Interns. Medical and dental residents and medical and dental interns at the Medical College of Georgia (BR Minutes, 1986-87, p. 340);
Full-Time School Employees. Full-time employees ~~teachers~~ in the public schools of Georgia or ~~in the programs~~ of the ~~State Board~~ Department of Technical and Adult Education, their spouses, and their dependent children. Teachers employed full-time on military bases in Georgia shall also qualify for this waiver (BR Minutes, 1988-89, p. 43);
Career Consular Officials. Career consular officers, their spouses, and their dependents children who are citizens of the foreign nation ~~which~~ that their consular office represents and who are stationed and living in Georgia under orders of their respective governments. ~~This waiver shall apply only to those consular officers whose nations operate on the principle of educational reciprocity with the United States;~~
Military Personnel. Military personnel, their spouses, and their dependents children stationed in Georgia and on active duty, unless such military personnel are assigned as students to System institutions for educational purposes;
Research University Graduate Students. Graduate Students attending tThe University of Georgia, the Georgia Institute of Technology, Georgia State University, and the Medical College of Georgia, which shall be ~~are~~ authorized to waive the out-of-state ~~non-resident~~ tuition differential for a limited number of graduate students each year, with the understanding that the number of students at each of these institutions to whom such waivers are granted shall not exceed the ~~quota~~ number assigned below at any one point in time:

University of Georgia 80

Georgia Institute of Technology 60

Georgia State University 80

Medical College of Georgia 20
Border County Residents. Residents of an out-of-state county bordering a Georgia county in which the reporting institution ~~Students who are legal residents of out-of-state counties~~ ~~bordering on Georgia counties in which an institution~~ or a Board-approved external center of the University System is located. ~~and who are enrolled in the institution;~~
National Guard Members. Full-time members of the Georgia National Guard, their spouses, and their dependent children. (BR Minutes, April, 1998, pp. 16-17); ~~and~~
Students enrolled in University System institutions as part of Competitive Economic Development Projects. Students who are certified by the Commissioner of the Georgia Department of Industry, Tourism and Trade as being part of a competitive economic development project;

Institutions shall exercise the greatest care in selecting students who are to receive waivers of the tuition differential. Such non-resident graduate students shall pay all tutition and fees required of residents of Georgia.

A Georgia-based coporation may contract with the Board of Regents to provide tuition differential waivers to the corporation's non-Georgia-domiciled employees attending University System institutions (BR Minutes, March, 1996, p.47).
Students in Georgia-Based Corporations. Students who are employees of Georgia- based corporations or organizations that have contracted with the Board of Regents through University System institutions to provide out-of-state tuition differential waivers;
Students in Pilot Programs. Students enrolled in special pilot programs approved by the Chancellor. The Chancellor shall evaluate institutional requests for such programs in light of good public policy and the best interests of students. If a pilot program is successful, the tuition program shall be presented to the Board for consideration;
Students in ICAPP® Advantage programs. Any student participating in an ICAPP® Advantage program; and
Direct Exchange Program Students. Any international student who enrolls in a University System institution as a participant in a direct exchange program that provides reciprocal benefits to University System students.

704.042 WAIVER OF MANDATORY FEES

An instituion may waive mandatory fees, excluding technology fees, for:

Students who reside or study at another institution
Students enrolled in practicum experiences (e.g., student teachers) or internships located at least 50 miles from the institution.
Students enrolled in distance learning courses or programs who are not also enrolled in on-campus courses nor residing on campus.
Students enrolled at off-campus centers, except that the institution shall be authorized to charge select fees to these students for special services subject to approval by the Board of Regents.

NOTE: For the definition of residency status, see Section 403.

2. Approval of Changes to The Policy Manual, Section 701.01 Private Donations to the University System and Its Institutions

Approved: The Board approved changes to Section 701.01 of The Policy Manual, effective May 8, 2002.

Background: Beginning last year, the University System Office embarked upon an effort to update Board policies to eliminate outdated practices and practices which imposed unnecessary burdens upon institutions. The Policy Manual changes proposed herein are designed to clarify current policy, as follows:

Establishes that the Board must accept on behalf of any University System institution all gifts, requests, agreements, or declarations of trust where the initial gift or trust estate is valued at $100,000 or more.
Establishes that any donation of real property valued at $100,000 or more to an institution shall require approval of the Board of Regents.

701.01 PRIVATE DONATIONS TO THE UNIVERSITY SYSTEM AND ITS INSTITUTIONS

The Board of Regents of the University System of Georgia, recognizing that public institutions are dependent, in part, on private funding (just as private institutions are partially dependent on public funding) encourages the institutions under its control to seek the support of alumni, friends, corporations, and other private individuals and organizations who might be interested in contributing to the welfare of the institutions, their students, and their faculties.

Funds raised from private donations may be used in support of the mission and objectives of the institution, including funds for student scholarships, salary supplements, construction of physical facilities, and gifts and grants for other purposes as may be designated by the donor. However, institutions are not authorized to commit any state funds for challenge or matching grants or gifts for the construction of facilities or for other purposes without prior approval of the Chancellor.

The Board of Regents shall not consider gifts, contributions, or income from endowments held for the benefit of any University System of Georgia institution in determining the allocation of state funds to that institution.

Private donations to separately incorporated cooperative organizations established pursuant to Section 1905 of The Policy Manual shall not be subject to control by the Board of Regents or the college or university administration except as provided in Section 1905 or by the memoranda of agreement established between institutions and their cooperative organizations.

The Board of Regents must accept on behalf of any University System of Georgia institution ~~Chancellor is authorized to accept, on behalf of the Board of Regents,~~ gifts, bequests, agreements, or declarations of trust in those instances where the initial gift or trust estate is valued at $100,000 or ~~less~~ more. Additionally, gifts of real property to any USG institution where the initial value is $100,000 or more shall require prior Board approval. Institutions shall report annually to the Chancellor on all gifts received through private donations under procedures established by the Vice Chancellor for Fiscal Affairs and Treasurer. The Chancellor is ~~further~~ authorized to execute, on behalf of the Board, those documents necessary to provide proper fiscal management of those funds accepted under this authorization and, except as provided in this paragraph, to further delegate the authority to execute such documents. The Chancellor may, at his/her discretion, delegate the authority to execute said documents to the Treasurer or to the presidents of the several institutions in the University System, provided, however, that the Chancellor is not authorized to delegate to the presidents the authority to accept gifts of real property (BR Minutes, 1980-81, p. 241; January 1997, p. 24).

3. Approval of Changes to The Policy Manual, Section 702.0102 Auxiliary Enterprises

Approved: The Board approved changes to Section 702.0101 of The Policy Manual, effective

May 8, 2002, to ensure that auxiliary enterprise programs operate consistent with new accounting requirements.

Background: Governmental Accounting Standards Board Statements Nos. 34 and 35 require colleges and universities to use the full accrual basis of accounting. Thus, depreciation of assets is required in fiscal year 2002. Depreciation is the accounting process used to allocate the cost of an asset over its useful life. (For example, a computer that cost $3,000 with a useful life of three years would depreciate $1,000 per year with a resulting reserve of $1,000 per year; thus, at the end of three years, $3,000 would be available for replacement of the computer). Consequently, the 5% repair and replacement reserve is no longer necessary.

702.0102 AUXILIARY ENTERPRISES

The second division -- auxiliary enterprises -- shall be placed on a self-supporting basis, and the state will not make appropriation to finance its operation. Funds collected from these enterprises will be used to provide the best possible services that can be provided for the amount charged without subsidy or support from the funds of the institutions for maintenance and utility services. Accounting records for auxiliary enterprises will be maintained on the full accrual basis of accounting, therefore, funded depreciation will be required for all auxiliary enterprise service equipment, buildings, infrastructure and facilities, and other improvements. The reserve for depreciation will be used for repair and replacement of auxiliary assets according to guidelines provided in the Business Procedures Manual. ~~Profits made from these enterprises will be used at the direction of the Board for auxiliary enterprises (BR Minutes 1963-64, p.391; 1984-85, p. 375).~~ The funds collected will be left with the institutions. and an institution will be permitted to expend only 95% of its gross income in the operation of these enterprises. Profits made from these enterprises will be used at the direction of the Board for auxiliary enterprises (BR Minutes 1963-64, p. 391; 1984-85, p. 375).

Intercollegiate athletics shall be classified as an auxiliary enterprise for financial reporting; however, the provision of this policy prohibiting support from the funds of the institutions for maintenance and utility services ~~and the provision permitting expenditure of only ninety-five percent (95%) of gross income~~ shall not apply. Additionally, funds from intercollegiate athletics shall not be commingled with other auxiliary enterprise funds.

4. Acceptance of Gifts for the Georgia Institute of Technology

Approved: The Board accepted on behalf of the Georgia Institute of Technology ("GIT") gifts-in-kind from the following corporation:

Company	Value	Items	Department
Intel Corporation	$130,482	Various Computer Equipment	School of Electrical & Computer Engineering

Background: Board policy requires that any gift to a University System of Georgia institution with an initial value greater than $100,000 must be accepted by the Board of Regents. The equipment will be used in GIT's Internet teaching lab. GIT has advised that there are no material costs associated with the acceptance of this gift.

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COMMITTEE ON REAL ESTATE AND FACILITIES

The Committee on Real Estate and Facilities met on Tuesday, May 7, 2002, at approximately

2:20 p.m. in the Board Room. Committee members in attendance were Chair George M. D. (John) Hunt III, Vice Chair Joel O. Wooten, Jr., and Regents Connie Cater, J. Timothy Shelnut, Glenn S. White, and James D. Yancey. Board Chair Hilton H. Howell, Jr. was also in attendance. Chair Hunt reported to the Board on Wednesday that the Committee had reviewed 13 items, 9 of which required action. One item was withdrawn prior to the meeting. With motion properly made, seconded, and unanimously adopted, the Board approved and authorized the following:

1. Information Item: Master Plan, Medical College of Georgia

The Medical College of Georgia physical master plan was presented by President Daniel W. Rahn and the consulting firm of Cooper Carry, Inc. This item was presented to the Committee on Real Estate and Facilities as a Committee of the Whole. (See pages 13 to 14.)

2. Executive Session, Augusta State University and Medical College of Georgia

At approximately 2:15 p.m. on Tuesday, May 7, 2002, Chair Howell called for an Executive Session for the purpose of discussing the acquisition of property. With motion properly made and variously seconded, the Regents who were present voted unanimously to go into Executive Session. Those Regents were as follows: Chair George M. D. (John) Hunt III, Vice Chair Joel O. Wooten, Jr., and Regents Connie Cater, Michael J. Coles, J. Timothy Shelnut, Glenn S. White, and James D. Yancey. Also in attendance were Chancellor Thomas C. Meredith; the Secretary to the Board, Gail S. Weber; the Senior Vice Chancellor for External Affairs and Facilities, Thomas E. Daniel; the Interim Vice Chancellor for Facilities, George Wingblade; the Assistant Vice Chancellor for Facilities (Design and Construction), Linda Daniels; the Assistant Vice Chancellor for Facilities (Real Properties), Peter J. Hickey; the Assistant Vice Chancellor for Legal Affairs (Contracts), Robyn Crittendon; President Daniel W. Rahn, Medical College of Georgia; President William Bloodworth, Jr., Augusta State University; and John Anderson of Anderson Design. In accordance with H.B. 278, Section 3 (amending O.C.G.A. § 50-14-4), an affidavit regarding this Executive Session is on file with the Chancellor's Office. At approximately 2:50 p.m., Chair Hunt reconvened the Committee meeting in its regular session and announced that no actions were taken in Executive Session.

3. Facility Naming, Valdosta State University

Approved: The Board approved the naming of the north campus at Valdosta State University ("VSU") to the "Rea and Lillian Steele Business Center North Campus" of VSU.

Understandings: The Steeles were long-time contributors to VSU.

Rea Steele was one of the original founders of First State Bank, which became part of the holding company of Synovus Financial Corp. During his tenure with the bank, he served as Chairman and Chief Executive Officer. He began his career at the bank in 1954 and retired in 1982. Mrs. Steele was the former Lillian Skinner of Valdosta.

Mr. Steele was a major supporter of VSU's first capital campaign in 1986. He was active in business and community affairs, including the Chamber of Commerce, Georgia Christian School, Boys Club of Valdosta, and the Soup Kitchen. He attended the University of Florida and graduated from Bob Jones University and Rutgers School of Banking.

The estate of Mrs. Steele, estimated at $10.5 million, is gifted to VSU and will be utilized to endow scholarships in the College of Business and for two matching distinguished chairs in the College of Business.

4. Demolition of Building Number 82, Joseph B. Whitehead Infirmary, Georgia Institute of Technology

Approved: The Board declared Building Number 82, the Joseph B. Whitehead Infirmary Building, located on the campus of Georgia Institute of Technology ("GIT"), Atlanta, Georgia, to be no longer advantageously useful to GIT or other units of the University System of Georgia and authorized the demolition and removal of this building.

The Board requested that the Governor issue an Executive Order authorizing the demolition and removal of this building from the campus of GIT.

The demolition of this building is subject to satisfactory completion of environmental review.

Understandings: In January 2001, the Board authorized construction of a student health center. At that time, the Board was informed of the intent to demolish the existing student health center. This request is for the demolition.

The Joseph B. Whitehead Infirmary is a two-story, 21,000-gross-square-foot brick and stucco building with slab on-grade foundation and a built-up roof.

A Georgia Environmental Policy Act evaluation and Environmental Report have been prepared for this proposed demolition. These reports indicate that any potential adverse impacts to historical resources that may be caused by the demolition of this facility will be adequately mitigated. The reports are currently being reviewed by the Department of Natural Resources, Historic Preservation Division.

The demolition is in accordance with the Georgia Institute of Technology Master Plan.

5. Demolition of Building Number 21, 190 Bobby Dodd Way, Georgia Institute of Technology

Approved: The Board declared Building Number 21, 190 Bobby Dodd Way, located on the campus of Georgia Institute of Technology ("GIT"), Atlanta, Georgia, to be no longer advantageously useful to GIT or other units of the University System of Georgia and authorized the demolition and removal of this building.

The Board requested that the Governor issue an Executive Order authorizing the demolition and removal of this building from the campus of GIT.

The demolition of this building is subject to satisfactory completion of environmental review.

Understandings: The building at 190 Bobby Dodd Way is a two-story, 12,300-gross-square-foot concrete frame structure with a concrete and stucco finish exterior.

The Renovation and Expansion of Bobby Dodd Stadium/Grant Field, a project authorized by the Board in May 2001, proposes an expanded stadium and plaza in the location of the 190 Bobby Dodd Way building. This expanded plaza will enhance the athletic program by providing better stadium entrance and egress for students, faculty, staff, and the general public.

The building currently houses the Grants & Contracts Accounting, Indirect Cost Recovery, and Risk Management user groups. These user groups will be relocated to two other buildings on campus: the 711 Marietta Street building and the 505 Tenth Street building.

A Georgia Environmental Policy Act evaluation and Environmental Report have been prepared for this proposed project. These reports indicate that any potential adverse impacts to historical resources that may be caused by the demolition of this facility will be adequately mitigated. The reports are currently being reviewed by the Department of Natural Resources, Historic Preservation Division.

6. Ground Lease and Rental Agreement for East Campus Dining Hall, University of Georgia

Approved: The Board declared approximately 6.4722 acres of land on the campus of the University of Georgia ("UGA"), Athens, Georgia, no longer advantageously useful to UGA or other units of the University System of Georgia but only to the extent and for the purpose of allowing this tract of land to be leased to UGAREF East Campus Housing, LLC (the "LLC") for the purpose of constructing and owning a 69,270-gross-square-foot dining hall for UGA.

The Board authorized the execution of a lease agreement between the Board of Regents, Lessor, and the LLC, Lessee, for approximately 6.4722 acres of land on the campus of UGA for a period of 33 years with one option to renew for a period up to five years for the purpose of constructing and owning a 69,270-gross-square-foot dining hall for UGA.

The Board also authorized the execution of a rental agreement between the LLC, Landlord, and the Board of Regents, Tenant, for approximately 69,270 gross square feet for the period commencing on the first day of the first month after the LLC obtains a certificate of occupancy for the improvements and ending June 30, 2004, at a monthly rental of $108,333.33 ($1,300,000 per year/$18.77 per square foot per year) with options to renew on a year-to-year basis for 29 consecutive one-year periods at the same rent rate.

The terms of the above-referenced lease and rental agreements are subject to review and legal approval of the Office of the Attorney General.

Understandings: In October 2001 and March 2002, the Board authorized and amended ground leases for housing and a parking deck on East Campus. The potential for a student dining facility was contemplated; however, planning for the facility was incomplete. This facility will include a dining hall, commissary, bookstore, and parking services headquarters. These service facilities are not currently available within the East Campus development.

Construction of the dining hall is in accordance with the University of Georgia Campus Master Plan. At the end of the terms of the ground lease, the land, all improvements, and any accumulated capital reserves will become the property of the Board of Regents.

Operating costs for the rental agreement, including utilities, insurance, maintenance, repairs, janitorial services, and pest control, are estimated to be $344,200 per year.

Rental and operating expenses will be paid from UGA auxiliary funds.

7. Rental Agreement, East Campus Parking Deck, University of Georgia

Approved: The Board authorized the execution of a rental agreement between UGAREF East Campus Housing, LLC (the "LLC"), Landlord, and the Board of Regents, Tenant, for an approximately 850-car parking deck and 400 surface parking spaces for the period commencing on the first day of the first month after the LLC obtains a certificate of occupancy for the improvements and ending July 31, 2003, at a monthly rental of $64,583.33 ($775,000 per year) with options to renew on a year-to-year basis for 29 consecutive one-year periods at the same rent rate.

The terms of the above-referenced rental agreement are subject to review and legal approval of the Office of the Attorney General.

Understandings: In October 2001 and March 2002, the Board authorized and amended a ground lease for a parking deck on East Campus. The Board was informed that a rental agreement would be presented for consideration when construction of the parking deck is complete.

Operating costs for the rental agreement, including utilities and insurance, are estimated to be $52,000 per year.

Rental and operating expenses will be paid from UGA auxiliary funds.

8. Rental Agreement, Studies Abroad Program, Costa Rica, University of Georgia

Approved: The Board authorized the execution of a rental agreement between La Dominga de San Luis, S.A., a nonprofit affiliate of the University of Georgia Foundation, Inc. (the "Foundation"), Landlord, and the Board of Regents, Tenant, for approximately 169 acres of land with building structures in Costa Rica for a period commencing on the first day of the first month after the Foundation closes on the property and ending June 30, 2003, at a monthly rental of $7,083.33 ($85,000 per calendar year) with options to renew on a year-to-year basis for 19 consecutive one-year periods with rent increasing 3% each year for the use and benefit of the University of Georgia ("UGA").

Modified: The rental rate was revised prior to the Board meeting.

The terms of this agreement are subject to review and legal approval of the Office of the Attorney General.

Understandings: UGA's Ecology and Environmental Study program has utilized this property for classroom and residential space as well as outdoor research. The property has previously been leased by students and faculty; however, it is shared with other universities and tourists and is not available year-round to UGA.

The land provides one of the few natural rain forests and ecosystems available for research. The buildings include a dining hall, four rooms with 30 bunks, a classroom, and a laboratory. There are also two rooms with 8 bungalow beds, a lodge with 12 rooms, a horse stable, and housing for employees.

Operating costs, including utilities, janitorial services, rubbish removal, pest control, and maintenance, are estimated to cost $82,976 annually.

Rental and operating expenses will be paid from UGA's Costa Rica Ecology and Environmental Study program fees.

9. Rental Agreement, Studies Abroad Program, Cortona, Italy, University of Georgia

Approved: The Board authorized the execution of a rental agreement between the UGA Real Estate Foundation, Inc. ("UGAREF"), Landlord, and the Board of Regents, Tenant, for approximately 30,000 rentable square feet in Cortona, Italy, for a period commencing on the first day of the first month after UGAREF closes on the purchase of the improvements and ending June 30, 2003, at a monthly rental of $10,833.33 ($130,000 per calendar year/$4.33 per square foot) for the first year. For the first option period, the monthly rental jumps to $18,333.33 ($220,000 per calendar year/ $7.33 per square foot) with options to renew on a year-to-year basis for 29 consecutive one-year periods with rent increasing 3% each year for the use and benefit of the University of Georgia ("UGA").

Modified: The rental rate was revised prior to the Board meeting.

The terms of this agreement are subject to review and legal approval of the Office of the Attorney General.

Understandings: UGA's Cortona, Italy, studies abroad program has utilized portions of this space for studio, classroom, and residential accommodations under a lease from the Italian government. The government is selling the property, and it would not be available to UGA following the sale.

UGAREF is preparing to purchase the property and make necessary repairs and renovations. UGAREF plans to rent the space back to UGA for its continued use.

If UGAREF is not the highest bi

University of Georgia	80
Georgia Institute of Technology	60
Georgia State University	80
Medical College of Georgia	20

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Meeting Minutes - May 2002