ND STATE BOARD OF HIGHER EDUCATION Minutes—August 29-30, 2006

Bismarck, ND

The State Board of Higher Education met August 29-30, 2006, at the Bismarck Country Club and Basin Electric in Bismarck, ND. Members present:

Mr. John Q. Paulsen, President Mr. Charles Murphy Ms. Beverly Clayburgh, Vice President Mr. Nicholas Rogers Ms. Sue Andrews Mr. Richie Smith Mr. Bruce I. Christianson Dr. John Pederson, Faculty Advisor Ms. Pam Kostelecky

Presidents, campus deans, and campus representatives present:

Mr. Gordy Binek, BSC Dr. Sharon Hart, NDSCS Dr. Lee Vickers, DSU Dr. Joe Chapman, NDSU Dr. Sharon Etemad, LRSC Dr. Charles Kupchella, UND Dr. Gary Hagen, MaSU Dr. Ellen Chaffee, VCSU Dr. David Fuller, MiSU Dr. Joe McCann, WSC Dr. Ken Grosz, MiSU-BC

Staff members present:

Mr. Eddie Dunn, Chancellor/Vice Chancellor for Strategic Planning/Executive Director CTEC Dr. Michel Hillman, Vice Chancellor for Academic & Student Affairs Ms. Laura Glatt, Vice Chancellor for Administrative Affairs Mr. H.P. Seaworth, General Counsel/Executive Secretary Ms. Debra Anderson, Public Affairs Director Ms. Sheila Tibke, SBHE Administrative Secretary/Financial Aid Assistant

RETREAT

August 29, 2006, the Board and Cabinet met for dinner at the Bismarck Country Club. Following dinner, Ms. Kostelecky briefed the Board and Cabinet members on the work of the Roles and Responsibilities Task Force and presented The Bottom Line report (Exhibit A). She said the purpose of the Task Force was to determine which statements and resulting policies adopted by the Board on April 15, 2004, still have integrity for the NDUS and which ones should be revisited and possibly revised. Some of the conclusions the Task Force reached: It is clear and not in need of further discussion or revision that we have and intend to

have a governing board form of governance.

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It is clear and not in need of further discussion or revision that the presidents work for both the chancellor and the Board.

It is clear and not in need of further discussion or revision that the chancellor is the CEO of the University System.

The Board has to do everything it can to acquire the resources necessary to assist the colleges and universities in remaining economically viable and capable of providing high quality education to students and others served.

Attention is needed in making sure the Board meetings, as well as the Cabinet meetings, are relevant and provide high value for time spent.

There is no need to spend a considerable amount of time and energy making major revisions to the structure of the University System or the mechanisms. The major effort needs to be focused on just doing what needs to be done.

There was discussion on the report. The retreat was recessed at 7:50 p.m. and reconvened at 8:00 a.m. August 30, 2006, at Basin Electric in Bismarck. Mr. Murphy joined the meeting at this time. Mr. Ron Harper, CEO/General Manager of Basin Electric, welcomed the Board. President Paulsen provided opening comments. He said he recognized that the past several months have been stressful to all, but noted that our focus must turn to the future. He said the Roundtable created many opportunities and challenges and we must recommit ourselves to it. He pointed out that the NDUS has three critical parts. They are the SBHE, the presidents and the Chancellor. He said each must be strong and we must recognize that each is interdependent on the other. He reminded all that both individually and collectively we must act, speak and behave respectfully, collegially and collaboratively. President Paulsen introduced Mr. Roger Reierson, facilitator for the retreat. Mr. Reierson presented his observations of the current environment and issues based upon his pre-retreat meetings with SBHE members and presidents. He summarized his observations as follows: The Roundtable is a great opportunity and there is nothing in the Roundtable report to

impede all those involved from doing their job.

Although the NDUS has come a long way, you cannot forget that you are plowing new ground. The challenge will be to remove the “boulders” that periodically surface so you don’t have to continue to go around them.

He said that the NDUS needs to take ownership of the Roundtable. He said the NDUS is not taking full advantage of the empowerment provided by the Roundtable; this includes calling meetings of the Roundtable as needed, evolving to fit the changes, and calling on the private sector to help get things done.

The NDUS needs to prove that the rewards section is deserved and that a new funding mechanism is in place. Demonstrate what you will do with the additional resources.

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Eleven institutions is our biggest strength, but only when we operate under a spirit of cooperation and unity.

Need to build consensus on appropriate operating behavior including a spirit of understanding and collaboration; define and understand communications and reporting relationships, recognize differences in institutional needs, build from the outside in, and understand that all must have a voice including faculty, students, and other constituents.

No one institution is more important than another. Need to understand and appreciate differences based on mission, community, and operating procedures. Presidents should be empowered and provided flexibility and in addition, president’s role and expectations within the NDUS should be defined.

Mr. Reierson asked the group what they wanted to walk away with today. Responses included: Define the relationship between the chancellor and the presidents in a unified system

How do the presidents report to the Board through the chancellor

The system reach consensus to address and take steps to address the current situation

We all understand clearly what our consensus definition of a unified system is and how one operates

Walk the talk – demonstrate behavior that supports the Roundtable and Roles and Responsibilities policies and procedures

Give evidence that we have learned to convey to the outside world how we have our act together

The System has a responsibility to respond in a flexible manner by addressing the needs to both internal and external customers

Working together cooperatively, the SBHE, presidents, and NDUS chancellor and staff will bring forth a unified and substantiated message that demonstrates higher educations strong support for the Roundtable

Continue to build a strong, trusting relationship and clearly identify the high priority items to be achieved this year

An environment where we can assume trust, collegiality, collaboration, and respect among all people associated within the system

Make sure what we say in words is how we actually behave

Speak with one voice to the legislature

Coordinate an approach for the legislative session and speak with a common message

Is there agreement on a unified system

Appropriate and equitable resources

All must be heard and we should listen to our constituencies and bring the messages back

Lack of trust by some in higher education to carry out the Roundtable

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Are there opportunities to involve others to help us move forward For the first breakout session, Mr. Reierson formed three groups. Each group was asked to discuss the following questions:

1. How can we have a flexible model where the president is empowered to make decisions to achieve a successful institution and yet operate within a unified system?

2. How do we operate as a unified system when our institutions are so different? (different problems/different solutions)

3. Communications between presidents, chancellor, and Board – how do presidents report to both the chancellor and the Board?

Responses from the group discussions included: Everyone has a role, everyone understands each others role, and remove the threat of

losing our role.

How do we achieve/determine our mission?

Are we starting new programs because we are in search for enrollment or because there is a state or regional need or because we want to become a national center of excellence or something like that?

Transfer agreements (in response to the second question).

Institutions should have the ability to do what they need to do to serve their constituents and still work within a system.

Spend more time on common issues at Board meetings rather than what divides us.

Spend more time on planning the agenda to make it more efficient as well as to make the time we spend together more efficient. There needs to be time on the agenda to have more important discussions. Some issues mentioned were the impact on North Dakota higher education of worldwide on-line education, comments from the NDUS staff and the presidents where they feel traditional education is going to go compared to eCollege, we need to think about what we have accomplished before we think about how we might change it, and focus on where higher education should be going nationally and at the state level and how do we best do that as a unified system.

Have some mechanism or opportunity for the Board to learn about the individual institutions in more depth (give each campus an opportunity to discuss with the Board any issues they may have).

Communication is good with the understanding that it is only communication and that neither Board members nor the System Office are approached informally with the expectation that they are going to do something. Issues must go through the process for final resolution with the Board.

The Board should focus on the philosophical issues confronting higher education in order to create a more defined framework for making the critical decisions affecting the system’s students and meeting the state’s needs. (directional statement)

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Attributes are open communication, action should not commence until an issue is on the table at a Board meeting, and decisions need a better filter system.

Work on how missions are created and addressed.

Look at programming as enrollment driven.

Support institutions to accomplish their missions; respect for each other’s roles; fairness in programming, etc.; and equity for students and employees.

Chancellor and Board should work to create an environment that allows each individual institution to be successful. The focus needs to be on open, honest, and trusting relationships among all of the key players. Part of this includes making sure that the right decisions are made at the right level. Also, we need to understand the importance of issues that are best handled with a system-wide approach.

Communication should be encouraged among the Board, the chancellor, and the presidents. This goes with the assumption that the chancellor and other members should be aware of any substantive conversations that take place between Board members and presidents or the chancellor and presidents.

Communication goes to the core values.

When a president visits with a Board member, are they lobbying or providing information?

Board members need to keep the chancellor informed, the chancellor needs to keep the presidents informed, the presidents need to keep the chancellor informed, and the chancellor needs to keep the Board informed. Presidents have the responsibility to work with the chancellor first.

Lines of communication need to be open; however, we all need to adhere to our organizational chart (directional statement).

Board members need to stay at the policy level.

The open records law is an issue. In the second breakout session, the Board members met as a group, the presidents met as a group, and the NDUS Office staff met as a group. Conclusions from those discussions are outlined below. SBHE discussion: It is not spelled out in the policy manual how the Board is to deal with conflicts between

individuals and the reporting systems. There was consensus across the Board that this issue has not been handled effectively in the past. The Board will set up a process for conflict resolution in order to protect the integrity of the presidents and the chancellor.

Recognized that one of the SBHE roles is to be the link between the public and higher education and that they must never speak about higher education as individuals, but only on behalf of the Board. Even if intended as an individual comment or view, it will be viewed as a SBHE position since they are a member of the SBHE. They agreed that the

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SBHE president is the spokesperson for the SBHE and requests for comments should be channeled to the SBHE president.

Agreed that they are appointed as state representatives and their comments and action should be for the good of the state, not individual institutions.

No end runs – one Board member will not carry the water for one institution or issue. Instead their role is to determine what is in the best interest of the system and state.

Reaffirmed that the SBHE must operate at the policy level and empower the presidents and chancellor to carry out operational items. This means “staying out of the weeds.”

Maybe the pendulum has swung too far on the way discussion has been limited at Board meetings about individual institutions. There may need to be more emphasis on listening to the presidents about the issues unique to their institutions.

The spirit of cooperation/team needs to be stronger at the Board level. The SBHE needs to build trust amongst themselves as well as with the presidents, chancellor, and the rest of the state.

The NDUS staff, in their breakout session, was asked to discuss the following: Refining

a. Communications and reporting b. Living under a unified approach

Successful, efficient and meaningful Board and Cabinet meetings Comments from the staff discussion: The overall message from the Roles & Responsibilities Task Force is that the presidents

feel a need to have an opportunity to keep the Board better informed on issues unique to their institutions. The perfect opportunity for the presidents to brief Board members is when the Board meets on their campus, on a rotating basis. This had been done in the past but was discontinued due to lack of SBHE interest. The staff questioned if the presidents and Board want to recreate this opportunity. Another suggestion, which was discussed at Roles & Responsibilities Task Force meeting, was for Board members to attend the Interim Higher Education Committee meetings in which tours or briefings are held on each campus.

Need to set aside time at each Board meeting to discuss major topics – future focused items. Ask presidents to identify major topics and lead the discussion. Another possibility is to bring in outside expertise.

Invite high-impact leaders, including community leaders and Roundtable private sector members, to the SBHE meeting luncheon to discuss how the NDUS can improve and be more responsive.

Comments have been made that there is a considerable amount of support materials for agendas and it is expecting major time commitment for people to go through and understand all the materials. Suggestion was made to include just the basics (summary/recommendation) with the agenda but with links to more information.

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Create more learning and professional development opportunities.

The presidents, in their breakout session, were asked to discuss the following: Refining

a. Communications and reporting b. Living under a unified approach

Economic vitality of our institutions a. Cost/benefit of each

Successful, efficient and meaningful Board and Cabinet meetings Comments from the presidents’ group included: There is not agreement on what a unified system is among all the presidents.

Do not think reporting and communication are the real issues. Everyone understands and is comfortable with the system as it is.

The three legs of the stool must be very strong and if all three legs are strong, there are bound to be issues and conflicts periodically.

We may be confusing communication with process. Need to keep in mind the process is important. In communicating, decisions are made in the appropriate place, the core values are followed, we accept the responsibility to remind each other if someone gets out of line, need to keep the chancellor in the loop, and it is unrealistic to tell presidents they cannot talk to Board members. We are all professionals and need to follow the organizational chart.

The system has some common purposes: we are all concerned about quality education for our students and we are all committed to the cornerstones of the Roundtable (to focus on the welfare of the state and economic development).

Presidents believe the Board should seek education on how Boards should deal with conflict because we all need help understanding how to function more effectively and efficiently.

There is a need to get more connected so that the Board fully understands what is really going on in the system and on the campuses. Suggestion was made to have time on Board agendas for presidents that have something to report but that it not be mandatory to report every time.

The greatest strength is having 11 distinct and unique institutions. Would like to make these even more distinct, which will create challenges. Need to set aside time where similar institutions can discuss issues that affect their campuses but do not impact the other campuses. However, there are times when it is beneficial for all campuses to hear what is happening on the other campuses.

Mr. Reierson suggested the Board and Cabinet have more discussion on a unified system.

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President Paulsen suggested a follow-up Board retreat in the near future. Mr. Reierson asked the participants what attributes they look for in a chancellor, what style of governance. Responses included: Good listener Collaborative leadership style Can deal with ambiguity Open to change Supportive of Board Vision of system Future focused Leadership Great communicator Managerial skills Selfless Forthright in a professional manner Sees his own personal reward as the

success of others Facilitator Ability to make hard decisions in the

best interest of they system Understand politics Empowers others Builds trusting relationships Success in higher ed Good at conflict negotiations Courageous leader

Good business leadership background

Supports entrepreneurial initiatives Develops trust Innovative Experienced CEO/high level

administrative background High integrity and honesty Trust/trusting Focused on serving others Not full of oneself Experience as a leader Experience in a multi-layer system Experience in a university/college

campus Understands leadership Vision Problem solving Student focused Politically astute Assertive Knowledge and appreciation of

campus leadership

Mr. Reierson then asked participants to identify what needs to be worked on to get to the next level in the next two years. After the funding mechanism, which would be at the top of everyone’s list, Mr. Reierson made the following suggestions: A closer link with P-16 Centers of excellence Private sector Soft skills Enrollment level – are we attracting and graduating the best and the brightest?

Board and Cabinet suggestions: Changing demographics including state population and addressing enrollment challenges

Continue working on ties between higher education and the economic development of state government and faculty senate

Accommodating the underserved population (25-44 year olds)

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Utilize the private sector more

Continue to support the centers of excellence

Better preparing students for college

Meet and match North Dakota’s workforce needs

Emphasize collaboration and empowerment at all levels

Continue to develop strategies to leverage the unique missions and opportunities of the 11 institutions in the NDUS

Strengthening the research corridor, delivering technical education across the state, and meeting K-12 needs

Focus on the underdeveloped community college system

Aligning behavior with Board and NDUS policies, beliefs, and core values Top priorities from the suggestions above: Changing demographics

Continue to develop strategies and opportunities

Workforce needs

Preparing students for college

Collaboration

Community college system Legislative AgendaChancellor Dunn asked for suggestions for the 2007 legislative agenda. Suggestions made included: Need to do a better job telling our story and the good things happening in the NDUS

Address the issues the private sector folks said we should be doing (from the private sector report)

Use the model that worked so well last time

Consider what it takes to get to the next step

One-time investments the legislature might consider

A plan to demonstrate what the NDUS would do with extra money

More of a statewide presence prior to decision making time of both legislators and constituents

Address a way of dealing with workforce shortages President Paulsen asked Chancellor Dunn to appoint a task force to create a legislative agenda for the 2007session.

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BOARD BUSINESS President Paulsen called the business meeting to order at 4:45 p.m. CT. 2007 Meeting Calendar President Paulsen presented a schedule of proposed Board meeting dates for 2007. It was moved by Kostelecky, seconded by Clayburgh, to approve the following proposed 2007 Board meeting schedule. Andrews, Christianson, Kostelecky, Murphy, Rogers, Clayburgh, and Paulsen voted aye. Smith was absent. The motion carried.

Date Location January 18 BSC March 15 BSC

May 3 NDSCS June 21 UND

August 2-3 Board Retreat September 20 MiSU September 25 Joint boards meeting November 15 MaSU December 20 Conference call

2006-07 Presidential Contracts President Paulsen and Chancellor Dunn presented the 2006-07 presidential contracts. It was moved by Andrews, seconded by Kostelecky, to approve the following resolution.

The Board continues the respective employment contracts for Presidents Chaffee, Chapman, Etemad, Fuller, Kupchella, McCann and Vickers for an additional three years, beginning July 1, 2006, each with a salary increase in the amount of 5%, retroactive to July 1, 2006 and no change in housing or vehicle allowances; that no action is taken on contracts for Presidents Hart, Binek and Hagen; that President Paulsen shall appoint a task force charged with expediting and completing the presidents’ and chancellor’s compensation study now underway by December 31, 2006; and, finally, that the Board intends that any compensation increases that are implemented for fiscal year 2006-07 as a result of that study will be retroactive to July 1, 2006.

Andrews, Christianson, Kostelecky, Murphy, Rogers, Clayburgh, and Paulsen voted aye. Smith was absent. The motion carried. Exhibit B. BSC Presidential Search Committee Chair Kostelecky provided an update on the Bismarck State College presidential search. She reported on-campus interviews have been scheduled for September 25-28, 2006.

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-The Bottom Line- Findings and Recommendations of the Roles and Responsibilities Task Force

August 24, 2006 Task Force on Clarifying Roles and Responsibilities: Ms. Pamela Kostelekcy, SBHE, Chairperson Mr. Richie Smith, SBHE member Dr. Joseph Chapman, President, NDSU Dr. David Fuller, President, MiSU Mr. Eddie Dunn, Chancellor Dr. Michel Hillman, Vice Chancellor for Academic & Student Affairs When the original Task Force on Clarifying Roles and Responsibilities completed its work in April of 2004, Chuck Stroup, who was the chairman of that task force, suggested the Roles and Responsibilities should be reviewed annually. As I look back on it, that was good advice. But for a variety of reasons, we have not done so. Questions have arisen in the past few months as to whether or not how we are functioning is consistent with what was outlined in the Roles and Responsibilities Report. Because of that, I felt it would be useful to do a review of that document, as well as the corresponding board policies to see if changes or refinements are needed. Therefore this past April, I appointed a task force with two people from each of the key components of the University System to serve on it. They are: Presidents Joe Chapman and David Fuller, Vice Chancellor Mike Hillman and then Vice Chancellor Eddie Dunn, and Board members Richie Smith and myself. With one exception, this is an entirely different group of people from those who drafted the original set of roles and responsibilities. The original task force consisted of: Board members Chuck Stroup, Bruce Christianson and Dick Kunkel; Presidents Sharon Etemad, Chuck Kupchella, and Lee Vickers; then Chancellor Larry Isaak and then Vice Chancellor Eddie Dunn. The Task Force that was appointed this past April has had three meetings. Two were face-to-face meetings and the other was by conference call. At our first meeting, held in Bismarck May 2, the task force reviewed the major recommendations from the original task force. The original recommendations were subsequently adopted by the board on April 15, 2004. The purpose of the review by the current task force was to determine which statements and resulting policies still have integrity for the University System and which ones should be revisited and possibly revised. At the first meeting we also had an open discussion on those topics or issues the task force members felt merited additional discussion by either the task force and/or by the full board at its retreat on August 30. The group ended up with a total of 24 topics which they felt were deserving of additional discussion. The group met again on August 2, 2006, in Fargo. We focused on two major areas: First, we reviewed the six key questions addressed by the original task force and reached consensus on

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which ones were sufficiently addressed and, therefore clear, and which ones needed to be revisited and possibly revised. The six questions are:

1. What form of governance is intended; i.e., a commission or coordinating board, a governing board, or other form of governance?

2. What is a “unified system of higher education?” The original task force developed a

description of what is meant by a unified system. The question the new task force addressed was – does this description still reflect and describe what is intended or desired when we refer to a unified system?

3. For whom do the college and university presidents work? i.e., for the chancellor, the

board, or both?

4. How do the presidents report? i. e., directly to the chancellor, directly to the board president, etc.?

5. Is the chancellor the CEO of the University System? If not, who is?

6. Are the existing policies adequate?

The task force reached the following conclusions regarding these key questions:

1. The original conclusion and statement regarding Question #1 (concerning what form of governance is intended) is clear and not in need of further discussion or revision (The consensus is that we have and intend to have a “governing board”);

2. The original conclusion and statement regarding Question #3 (for whom do the presidents

work) is clear and not in need of further discussion or revision (i.e., the presidents work for both the chancellor and the board);

3. The original conclusion and statement regarding Question #5 (concerning the chancellor

being the CEO of the University System) is clear and not in need of further discussion or revision;

4. The task force recommended the following topics be forwarded to the retreat for further

discussion: • What is a unified system? It was felt by some that we need more discussion on this. • How do the presidents report to the board? – We had considerable discussion on this

question and some great ideas were provided which we can mention when we get into that discussion later or tomorrow.

• Are the existing policies adequate? There were no suggestions for policy revisions

except one: It was originally suggested that the policy relating to presidents (Policy 305.1) was sufficient regarding duties and responsibilities of the president to the institution but that the policy was silent concerning responsibilities or expectations to

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the System. A later review revealed there is language in Policy 305.1 (Section 3-i) which addresses this expectation. We can discuss this further if there is interest.

The second major area the group focused on was the list of 24 topics or issues identified at our first meeting. Rather than go through each of those, I will provide a summary, or in my business – “bottom-line it.” I have grouped these into seven topic areas:

1. The task force spent a considerable amount of time discussing the role and responsibility of the board in assuring the “economic viability” of each of the colleges and universities under its governance. The two major points that came out of that conversation were: • The board has to do everything it can to acquire the resources necessary to assist the

colleges and universities in remaining economically viable and capable of providing high quality education to students and others served. This was one of the points included in the two resolutions prepared by the presidents recently and submitted to the board,

• It would be extremely valuable to the board, the governor, legislators and other key

stakeholders of higher education to have solid data which shows the overall benefit/cost of each of our institutions. That analysis, if done, could provide the benefits and costs to students, the community, the respective regions and the state-as-a-whole. There is a perceived “social cost” to the tax payers of North Dakota for having 11 higher education institutions located throughout the state. Unfortunately, no-one knows what that social cost is. It was the conclusion of the Task Force that the ACTUAL OR TRUE social cost (i.e., the cost to the taxpayers throughout the state of supporting anything beyond an absolute minimum number of colleges and universities – and that number varies from person to person depending upon with whom you are talking) is MUCH LESS than the public perception. The question posed was: Does the SBHE have a responsibility to provide that data for its own decision-making as well as for the decision-making of other policy makers throughout the state? I need to quickly add that it was the consensus of the task force, particularly the presidents on the task force, that this is a question and a decision that none of the presidents individually or collectively feel is appropriate for them to be involved in. This is clearly a board decision.

2. The second major topic discussed, and recommended for further discussion at the retreat,

relates to opportunities for the presidents to address the board to alert the board of developments or concerns. The bottom line of this discussion was there currently is not an adequate mechanism or communication channel which allows presidents to keep the entire board apprised of developments, including new directions, plans or emerging issues while, at the same time, complying with the spirit and letter of SBHE policies. To be more specific, communicate with and through the chancellor without creating “a funnel” for all substantive communication. This is the one area that has caused stress within the system. Several excellent suggestions were made to help address this concern which we can discuss further this evening or tomorrow. The point I would like to make

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is, this is an item that is certainly solvable. We are all smart people – we will get that one figured out.

3. The topic we probably spent the most time discussing, and it relates to point two above, is

communication. What a surprise! Again, the task force mentioned a number of ways for strengthening communication, horizontally and vertically, throughout the system. The “bottom line” I would put on this one is: There was strong consensus that strong trusting relationships are the foundation of any successful organization. Another “bottom liner” was: If the environment is right and the people involved in the organization are individuals who believe in working together, structure and mechanisms do not matter. Conversely, if the environment is not right and the willingness to cooperate does not exist, no structure or mechanisms will be effective. I think that says it all. This understanding must become a prominent part of our orientation and our guiding documents and it must also transcend those currently in leadership positions on the board, our institutions and system office so that it becomes an important part of our culture and mindset.

4. Another area where we feel attention is needed is making sure the board meetings, as

well as the Cabinet meetings, are relevant and provide high value for time spent. Because of the diversity of the different types and sizes of institutions in the NDUS, this provides a special challenge. It was felt that we can and should explore ways so that every board member and every president participates in and leaves each of these events believing it was time well-spent. We did not come to any conclusions or recommendations for this challenge but are recommending that it be a discussion topic at this retreat which, hopefully, will yield innovative and meaningful solutions.

5. Each of the presidents was asked to identify obstacles, if any, which are preventing their

institutions and/or the University System from achieving full potential. There was no discussion on the obstacles but it was agreed the complete list of these should be made available for those attending the retreat.

6. It was suggested that not everyone in leadership positions within the University System

has the same vision regarding the governance or operation of the system. The consensus of the task force was the SBHE has already taken an official position on this question. It was also concurred that this item should be forwarded for further discussion at the retreat for purposes of deciding what more can or needs to be done.

7. The overarching consensus of the task force, after several hours of discussion, was: There

is no need to spend a considerable amount of time and energy making major revisions to the structure of the University System or the mechanisms. The major effort needs to be focused on just doing what needs to be done. The actual quotes are: “We have everything in place. It’s just about getting about doing it.” A related comment made was: “The larger message is, we’ve got good work to do – let’s do it.”

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SUMMARY AND RECOMMENDATION PRESIDENT CONTRACTS

Summary

SBHE Policy 604.1 states the chancellor shall, based on annual performance assessments, submit to the SBHE president recommendations concerning the presidents’ contracts and the Board then approves the contracts. Prior to his departure, former Chancellor Potts reviewed the presidents’ performance assessments, although completion of that task was delayed until July. Because of that delay and also because of difficulty in obtaining critical information for a compensation study, the Board has postponed action on presidents’ contracts. NDUS office staff is continuing to gather critical information needed for a compensation study. That information is required in order to develop thoughtful recommendations on presidents’ compensation practices. However, it is already known that NDUS presidents are generally behind their peers at similar institutions – and several presidents are significantly behind their peers – in salary comparisons. Accordingly, there is no reason to further delay a modest salary adjustment. I have reviewed the 2005-06 self-assessments the presidents submitted to former Chancellor Potts and Chancellor Potts’ performance assessments for each president. Attached is a letter to Board President Paulsen with my recommendations concerning presidents’ contracts. Regarding Presidents Chaffee, Chapman, Etemad, Fuller, Kupchella, McCann and Vickers, I recommend that the Board continue the respective employment contracts for each president for an additional three years, beginning July 1, 2006. For all of these presidents, I recommend a salary increase of 5%, retroactive to July 1, 2006, with no change to housing or vehicle allowances at this time. Because of President Hart’s uncertain status, I recommend the Board not take any action on President Hart’s contract (which is for the term July 1, 2005 – June 30, 2008). Presidents Binek and Hagen have interim contracts ending June 30, 2007 and Board action on those contracts is not required. Attached to the letter addressed to President Paulsen is a table listing each president’s current salary and recommended salary for 2006-07. I further recommend appointment of a task force charged with expediting and completing the presidents’ and chancellor’s compensation study now underway by December 31, 2006. Also, I recommend that any adjustments to salary or allowances that are implemented for fiscal year 2006-07 as a result of that study be made retroactive to July 1, 2006.

Recommendation

I recommend the SBHE adopt the following motion: “The Board continues the respective employment contracts for Presidents Chaffee,

Chapman, Etemad, Fuller, Kupchella, McCann and Vickers for an additional three years, beginning July 1, 2006, each with a salary increase in the amount of 5%, retroactive to July 1, 2006 and no change in housing or vehicle allowances; that no action is taken on contracts for Presidents Hart, Binek and Hagen; that President Paulsen shall appoint a task force charged with

expediting and completing the presidents’ and chancellor’s compensation study now underway by December 31, 2006; and, finally, that the Board intends that any compensation increases that are implemented for fiscal year 2006-07 as a result of that study will be retroactive to July 1, 2006.”

Eddie Dunn, Chancellor

Date of Meeting: August 30, 2006

State Capitol - 600 E. Boulevard Ave., Dept. 215, Bismarck, ND 58505-0230

U N I V E R S I T Y S Y S T E M NORTH DAKOTA

The Vital Link to a Brighter Future August 21, 2006 Mr. John Q. Paulsen, President North Dakota State Board of Higher Education 1121 Westrac Drive, Suite 200 Fargo, North Dakota 58108 Dear President Paulsen: As required by SBHE Policy 604.1, I reviewed the self-assessments for the 2005-06 fiscal year submitted by each of the presidents of the colleges and universities within the North Dakota University System. I have also reviewed the performance assessments for each of the presidents prepared by former Chancellor Robert Potts. I concur with Dr. Potts’s observations, comments and suggestions regarding the evaluation of presidents, Chaffee, Etemad, Fuller, Kupchella, McCann and Vickers. I thereby recommend that the SBHE continue the respective employment contracts for each of these named presidents for three years beginning July 1, 2006, subject to the right of the Board to dismiss for cause. I reviewed the self-assessment provided by President Joseph Chapman for the 2005-06 fiscal year and the performance assessment prepared by former Chancellor Robert Potts. I also reviewed the August 2, 2006, letter submitted by President Chapman in response to the performance evaluation prepared by Dr. Potts. All matters considered, it is my recommendation to the SBHE that President Chapman’s employment contract be continued for three years beginning July 1, 2006, subject to the right of the Board to dismiss for cause. I reviewed the self-assessments for the 2005-06 fiscal year submitted by President Sharon Hart and the performance assessment prepared by former Chancellor Robert Potts. I concur with Dr. Potts’s observations, comments and suggestions regarding Dr. Hart, with one exception: “… recommend to the SBHE a continuation of your contract.” There have been developments over the last several months, including the August 17, 2006, action by the NDSCS Faculty Council, communication provided by the NDSCS Foundation Board, and concerns expressed by faculty and staff at NDSCS and by a number of concerned community leaders holding views and strong opinions on both sides of the issue regarding Dr. Hart continuing as president of NDSCS. In view of these developments, it is recommended that the SBHE delay action on President Hart’s employment contract until such time that the board is provided with appropriate and sufficient information to reach an informed decision.

Phone: 701.328.2960 • Fax: 701.328.2961 E-mail: NDUS.office@ndus.nodak.edu • Web: www.ndus.nodak.edu

The North Dakota University System is governed by the State Board of Higher Education and includes: Bismarck State College • Dickinson State University • Lake Region State College • Mayville State University • Minot State University • Minot State University-Bottineau Campus • North Dakota State College of Science • North Dakota State University • University of North Dakota • Valley City State University • Williston State College.

Page-Two John Q. Paulsen August 21, 2006 It is further recommended:

A task force be formed in early September 2006 and charged with expediting and completing the presidents compensation study, currently underway, by December 31, 2006; All presidents receiving and agreeing to employment contracts for the 2006-07 year, be

provided an across-the-board salary increase of 5% effective July 1, 2006; Upon completion of the presidential compensation study, any recommended pay

adjustments arising from the compensation study, be made retroactive to July 1, 2006; Presidents continue to be provided a vehicle allowance of $11,000 and housing allowance

of $20,000 unless recommended for change as part of the in-depth study to be completed. If the study finds adjustments are needed, it is recommended the adjustments be retroactive to July 1, 2006.

Rational for recommendations:

It was anticipated the compensation study underway would be completed in time to be considered in providing employment contracts for presidents for the 2006-07 year. There has been a delay in completion of that study due to circumstances beyond the control of the Board; There is a need to allow for adequate time to complete the compensation study and

provide the SBHE adequate time for a thoughtful review and discussion and the development of recommendations. The additional time is especially necessary considering the importance and sensitivity of the issue; Completing the study and implementing the recommendations, as feasible, by the end of

the calendar year will demonstrate a response to the urgency of resolving this long-standing issue. It will also allow the completion of the work prior to the start of the legislative session in recognition of the session workload and other time demands; Short-term pay increase, of 5% across-the-board, takes into consideration other employee

pay increases given for 2006-07 as follows: • System average-administrative positions 4.5% • System average-faculty positions 4.1% • UND administrative positions 4.5% • UND faculty positions 4.0% • NDSU administrative positions 4.9% • NDSU faculty positions 4.4% • Six other campuses had faculty pay increases of between 3-4% • 05-06 presidential salary increases provided for 5% across-the-board increases as

well.

Page-Three John Q. Paulsen August 21, 2006

Providing a short-term adjustment, with a mid-course longer-term adjustment as part of an overall plan, recognizes that several presidents are significantly behind their peers in compensation; Before further change is made to presidential contract terms, including rolling contract

provisions, thoughtful consideration and discussion is needed by the SBHE, including consideration of other possible alternatives.

Sincerely,

Eddie Dunn Chancellor, NDUS EDst:\Sheila\700\702\presidents contracts 8-21-06.doc

2006-07 President Salary RecommendationPrepared August 28, 2006

2005-06 Salary

Proposed 2006-07

SalaryDSU

Vickers, Lee $143,233 $150,395

LRSCEtemad, Sharon $113,207 $118,867

MiSUFuller, David $141,750 $148,838

NDSUChapman, Joseph $192,006 $201,606

UNDKupchella, Charles $192,006 $201,606

VCSUChaffee, Ellen $138,635 $145,567

WSCMcCann, Joseph $106,332 $111,649

g:terry\cabinet\contracts06-07\06-07 president salary recommendation.xls

Campus