June 12, 2006
MOREnet Council Meeting Minutes
Council Member Attendees: Robert Stein, Chair, Gary Allen, Cheryl Bielema, Annie Busch, Margaret Conroy, Curt Fuchs, Jeanie Gordon, Karen Hicklin, Bill Mitchell, Dan Ross, Bert Schulte, Don Doucette via conference call
Alternates Present: Rita Gulstad, Barbara Reading, Tom Stokes, Deborah Sutton
MOREnet Staff Present: David Byland, Jennifer Doll and Sherry Loyd
Public Present: Jim Tice
MOREnet Council Chair Stein called the MOREnet Council meeting to order. Those who were in attendance are listed above.
Minutes of the April 13, 2006 MOREnet Council Meeting
Bert Schulte moved that the minutes of the April 13, 2006 MOREnet Council meeting be approved as printed. Margaret Conroy seconded the motion, and it passed unanimously.
Fund Reserve/Fund Balance Operating Use Policies and Interrelationships
Dave Byland gave an overview of the "umbrella" document.
MOREnet Council Budget Development Process
A flow chart was distributed to visually show the interrelationships between the various funds and the budget development process within MOREnet. The process generally happens in the last fiscal quarter of the year.
Chair Stein requested that staff incorporate the appropriate process dates into the MOREnet Council planning calendar once a complete passage of the process has occurred. Rita Gulstad voiced concern with the timing in which institutions would need to know the information produced by the process; institutions should know prior to the fourth quarter what percentage of an increase they should expect. Stein suggested that the process may need to be given a jump start for FY08 in order to communicate appropriately and give adequate time for the institutions to incorporate the percentages into their budgets, and that in future years, earlier time frames could be implemented.
Fiscal Exigency Reserve (FER) Policy
Jennifer Doll reviewed the policy, and recommended the Council approve the policy as written. Gulstad proposed an amendment to change the third sentence of the first paragraph to: However, MOREnet operations pose a financial risk to the Curators of the University of Missouri, which is MOREnet's legal entity. Gary Allen moved to approve the policy with the recommended amendment. Don Doucette seconded the motion, and the policy as amended passed unanimously.
Program Operating Reserve (POR) Policy
Doll reviewed the policy and asked that the Council approve the policy as written. Cheryl Bielema moved to approve the policy. Jeanie Gordon seconded the motion, and it passed unanimously.
For-Fee Services (FFS) Fund Balance Use Policy
Chair Stein shared that some Council members wondered whether FFS should have a fund balance. Doll replied that staff looks at the FFS offering to determine an expected cost, demand and sets the pricing accordingly. Bill Mitchell reminded the Council that MOREnet conducts certain activities (like FFS) outside the jurisdiction of the Council MOU, and that the change in cost allocation methodology for FY07 was a primary reason for the FFS fund balance anticipated this year.
Chair Stein added that most of the Council has previously suggested the difficulty of ensuring a zero FFS fund balance in a given year. Chair Stein suggested that in addition to this policy, there could be a statement indicating that if MOREnet has significant positive balances in FFS for 2 consecutive years, the Council could review the cost allocations for those services.
Annie Busch moved to approve the policy as written in the Council materials. Jeanie Gordon seconded the motion, and it passed unanimously.
Plant Fund (PF) Use Policy
Chair Stein explained that the policy presented in the meeting materials included some editorial changes. He apologized that the distributed materials had not acknowledged the changes. A marked-up copy showing the changes made was distributed at the meeting. Busch moved to approve the edited version of the policy. Conroy seconded the motion, and it passed unanimously.
Fiscal Exigency Reserve (FER) Implementation
FY07 FER Assumptions and Estimate
Doll reiterated that this is a fiscal exercise for risk management and not an operational plan. In this planning exercise it was assumed the decision to shut down would be made before a fiscal year started, and that it would require 12 months to conduct transition of member circuits to alternative sources. Doll reviewed the assumptions for the Council.
Chair Stein asked if we knew what the telecommunications contract penalties could be, if challenged. According to Doll it could be 50% or a lesser percent of the remaining contract. This is a standard university clause and the University of Missouri would stand behind MOREnet if challenged.
The question was asked why members would not be able to continue to use Online Resources until they dropped off of the MOREnet network. Doll replied that the licenses for Online Resources would remain if funded via House Bill 12; however, staff support for that resource would be eliminated. Since these resources are funded through House Bill 12, Mitchell speculated that the University and the State Library might choose to continue the licenses for the shut-down year, with staff support from other UM entities.
Fuchs asked why E-rate support would be continued for 12 months. Doll explained that the E-rate applications process takes multiple years before being complete, and that MOREnet as well as members would need assistance with E-rate applications during circuit transitions.
The proposed FER estimated amount for FY07 is $2.9M. Staff recommended the Council approve the FER assumptions and estimate for FY07 as described. Busch moved to approve the assumptions and FER estimate as presented. Gordon seconded the motion, and it passed unanimously.
Gulstad moved to stipulate that future FER assumptions should include an additional Revenue Assumption indicating that Plant Fund balances would be taken into consideration in generating a specific FER funding estimate. Busch seconded the motion, and it passed unanimously.
FY07 FER Revenue Sources
The FY07 preliminary budget from the January 31, 2006 meeting was distributed to aid in a discussion of where the $2.9M for the FER might be derived. Doll reminded the Council that due to the UM audit findings, the FER is the first priority to fund followed by Plant Fund decisions. This item was for discussion purposes; however, it is crucial to conduct discussions now to ensure that the Council's identification of the $2.9M needed to fund FER will occur at the July 14 meeting.
In response to a question from Allen, Mitchell replied that the funding of the $2.9M must be identified as a lump sum and that MOREnet has a deadline of June 30th to file their risk management plan (including the FER of $2.9M).
Schulte stated that he is not concerned with the fund balances of each member group. He is interested, however, in investigating how the State funds each program and see if that method could be used.
Chair Stein indicated the need to attend a bill signing and turned the meeting over to Conroy for approximately one hour. Conroy took over as chair of the Council.
Conroy asked that each member group explain how their fund balance came to be.
Mitchell shared that the Shared Network balance is primarily the source of E-rate that is directed to the Shared Network. Doll added that the budget provided shows cash received and forecasted for those in which commitment letters have been received.
Sutton shared that prior to FY00, TNP had built a balance of nearly $3 million that remained fairly untouched until FY06. In FY00 district bandwidth was increased from 56K to T1 and the eMINTS program was started state-wide, but TNP user fees were not changed as E-rate funds were used to zero-balance the budget annually. In FY02, when the annual appropriation began receiving cuts, schools became eligible for Title II.D funds. The competitive Title II.D funds were earmarked to support district participation in the eMINTS program, so fewer TNP funds were needed for eMINTS. Not until FY06, because of the significant reduction in the appropriation and dwindling E-rate discounts, did it become necessary to increase user fees. For FY06, the Department decided to increase the fees by 50% and use about $200,000 from the reserve. The same scenario is expected for FY07 - keeping the 50% user fee increase and using about $247,000 out of the reserve. Currently no activity is adding to the balance.
Reading shared that the Library balance is largely due to E-rate and has only just accumulated over the last 2-3 years due to the lag time in accruing the monies. She believes that the balance was impacted by aggressive negotiations for bandwidth that helped REAL, but was followed in FY02 or FY03 by the first budget cuts to House Bill 12 which caused the program to be downsized in order to stay within appropriation. From limited downsizing and the lag time in achieving E-rate funding, the balance has grown. She also feels that past information received, whether via meetings, meeting minutes or MOREnet reports, has raised concern over having an exigency fund, and having appropriate reserves led to the libraries accruing some kind of balance within the program in order to address program requirements and funding for Online Resources.
The higher education operating fund is totally generated by member fees. The reserve balance helps offset projects such as the HELIX conference, training etc. and is used to supplement member fees and shortfall assessments. The largest cost for some institutions is for the bandwidth assessment; unlike TNP and the libraries, the MERC participants must fund assessments via member billing.
The staff was requested to send funding model scenarios electronically to the Council. Models will be prepared to both include and exempt Online Resources. Discussion of the scenarios will take place electronically, with Chair Stein calling a conference call if he deems it appropriate.
Chair Stein thanked Rita Gulstad, Barbara Reading and Deb Sutton for their work in creating a first draft of the Council goals. It was agreed that the draft was of conceptual goals without measured indicators. The Council agreed to devote part of the July 14th meeting to a work session on Council goals. A major objective of the work session will be to develop a draft document that can be used as a foundation for evaluating Council effectiveness.
Mitchell reported that if the Governor signs House Bill 3, MOREnet will have ended up with a 1% increase. He thanked everyone on the Council for their part in the legislative session.
Mitchell reported that there will be a formal, written NGN project plan at the July Council meeting. A two-phased approach is taking place with the first phase to increase the bandwidth on the current backbone and to increase internet capacity. The bids are currently on the street and are due back early July. This is a short-term approach to ensure there aren't constraints on the network. Phase 2 is looking at a hybrid model of a possible long-term lease of fiber along the I-70 corridor and the metro St. Louis and Kansas City areas.
Public Higher Education Circuit Cap Increase
Chair Stein explained the Department of Higher Education has approved increasing the maximum tail circuit cap from 45 megabits to 75 megabits effective July 1, 2006, and that due to a change in technology the increase will not result in higher tail circuit costs.
Byland reported that for MOREnet has received an official Administrative Notice of Reconsideration from the SLD concerning the FY05 application. There was verbal assurance from SLD for an expedited review of that application, but that has not yet occurred. This is in part due to the FCC issuing two orders to the SLD to review 600 applications the SLD had denied for "minuscule or clerical errors". The SLD has 60 days to review those applications. MOREnet does not expect to receive its funding letter by June 30 but does expect to receive it in FY07. The FY06 application is proceeding normally through the SLD process.
FY08 Appropriation Request Update
In a meeting with Nikki Krawitz, UM Vice President for Finance and Administration, Mitchell learned that the University did not take a preliminary appropriations request to the Board of Curators during their June meeting. It will go to the Board for review and approval at their July 20 meeting. Barring any announcements from the Governor's office or the Office of Administration concerning submission parameters, it is believed that the intent of President Floyd is to forward the MOREnet appropriation request as submitted.
Planning Calendar Update
Byland reported that updates to the calendar are highlighted. Chair Stein asked that staff look at the planning calendar and add in FER budget development activities as discussed earlier in the meeting.
MOREnet Good News
Byland reported that the libraries are conducting several videoconferences over the summer. These videoconferences include a healthy home conference, several supporting the national Summer Reading Program and several arranged by the St. Louis Zoo and St. Louis Public Library.
Crowder College has been noted for their involvement in solar energy and their participation in the solar car race from Texas to Canada. They have also received state funding to develop a research initiative involving alternative energy sources. New interest has been expressed in their using videoconferencing with building trade classes around the state, as well as vocation programs, 4-H clubs, and others to investigate solar energy and other forms of renewable energy.
MOREnet has started a member outreach project to gain input regarding a number of issues. Currently, staff has made 400 calls with 70% of those calls resulting in member conversations. Staff hopes to have contacted most members by the end of June, and will report findings at a future Council meeting.
On behalf of the county commissioner, Busch thanked MOREnet for their involvement in the Riverbluff Cave, stating that without MOREnet and especially the individual efforts of Bill Giddings, the cave features and electronic accessibility would have been severely limited.
Dan Ross reported that the State bid for a converged voice, video, and data network is on the street. He thanked Mitchell for his staffs' time and also thanked him in advance for MOREnet's participation on the bid evaluation panel. The State's intent is to make an award by mid-fall.
June 16th is the official date of the IT consolidation effort at the State. There will be a large kick-off event for those staff affected.
Ross reported new hires in respective positions: Arlan Holmes, Deputy for Administration; Bill Bott, Deputy for Operations; and Chris Wilkerson, Deputy for Infrastructure.
The East ring of the MoDOT fiber is lit and the West ring is nearing completion.
Conroy announced that Beth Fischer has accepted the position of MOBIUS director effective August 1st. Reading reported that the State Library is close to signing their agreement with MOREnet. MOREnet staff is researching functional software, such as blogs and wikis, to help promote communications among the library members. Gulstad suggested Reading contact Nancy Piringer as MERC is currently setting up some virtual conferences for this fall with knowledgeable speakers in this area.
Sutton reported that charter schools can now choose to become LEA (districts), and this year ten schools have decided to take that status. This will enable them to become MOREnet members.
Due to the No Child Left Behind Act requiring accessibility of student records and data, over 50% of the school districts are using a program offered by the Student Information Systems Company (SIS) for their record keeping. SIS is piloting a web-based product to simplify this process. DESE is watching this pilot closely as it may require additional bandwidth for 200+ districts.
Chair Stein reported that the Commissioner of Higher Education has submitted his resignation effective July 1. Commissioner Fitch will head the Alabama Commission on Higher Education. CBHE is scheduled to meet this week and presumably will make announcements regarding transition activities, along with the process and anticipated timeline for selecting a replacement for Commissioner Fitch.
Chair Stein reported that the Governor has charged a subgroup to look at the establishment of a shared data repository to be used by K-12, higher education and economic development. The subgroup has been charged with coming up with a plan to collect and maintain P-20 student data. Busch volunteered to share an impact study from the Springfield Chamber of Commerce with the Council.
Chair Stein reported that the MO METS (Missouri's Mathematics and Engineering Technology and Science initiative) Summit occurred and that a website has been established at http://governor.mo.gov/mets/. A mathematical/science alliance group will meet through the summer as they have been charged to determine a plan of action for bio-informatics.
Gulstad reported that the MERC Board has developed goals to include a focus on technology innovation in the nation, pod casting, and available communications tools.
Chair Stein provided the Council with Bill Giddings's home address for those wishing to express sympathy on the loss of his mother.
He also reminded the Council that an alternate has not been identified for the libraries or for UM System.
- July 14, 2006
- September 15, 2006
- November 17, 2006
Open Time for the Public to Address the Council
Fuchs moved to adjourn at 2:11 p.m. Allen seconded, and it passed unanimously.
Council Meeting Action Items:
- Staff to incorporate appropriate budget and FER development process dates into the MOREnet Council planning calendar for FY08.
- Staff to send funding model scenarios electronically to the Council; to be followed by electronic discussions.
- Busch is going to share an impact study from the Springfield Chamber of Commerce with the Council.
July 14th Agenda Items:
- FER Funding Determination
- Plant Fund Recommendations
- FY07 Operating Budget
- NGN Update