Churchill statue - Fulton, MO

MOREnet Council Meeting Minutes - June 20, 2011

TIME: 8:00-9:00 a.m., Monday, June 20, 2011

PLACE: Conference Call, 866-299-7945 (toll free), Participant Passcode: 8257350#

Members present: Margaret Conroy, Chair, Gary Allen, Russ Brock, David Doennig, John Gillispie, Leigh Ann Grant-Engle, Rita Gulstad, Debbie Hughes, Craig Klimczak, Rusty Monhollon, Waller McGuire, Doug Young

Alternates present: Mark Mabe, Barbara Reading, Cindy Youngblood

MOREnet staff present: Natasha Angell, Lynn Burgan, Chip Byers, Sherry Loyd, Hank Niederhelm, Greg Silvey

Chair Margaret Conroy called the MOREnet Council meeting to order. Those who were in attendance are listed above.

ACTION ITEMS/INFORMATION ITEMS

Minutes of the May 3, 2011 MOREnet Council Meeting – Approval

Chair Conroy asked for comments on the May 3, 2011 meeting minutes as distributed. There were no comments and the minutes were approved.

Minimum Operating Reserve – FY12 Assumptions and Estimate– Endorsement

Lynn Burgan reviewed the MOR purpose and FY12 shut-down assumptions. Craig Klimczak moved to accept the staff’s recommendation that the Council approve the MOR assumptions and estimate for FY12 as described. David Doennig seconded the motion and it passed unanimously.

Plant Fund Contribution – Endorsement

Burgan reviewed the PF history, funding mechanism and reason for requested adjustment.

Doennig moved to accept the staff’s recommendation that the Council approve the FY10 PF transfer of $1,110,000 from Shared Network, the FY11 revised PF transfer of $600,831, and the use of the $2,697,000 in the PF for FY12 and FY13 PF contributions and the remainder to be retained in the PF for unanticipated capital purchases. Craig Klimczak seconded the motion and it passed unanimously.

Minimum Operating Reserve and Plant Fund Contribution Funding – Endorsement

During the 2011 internal audit conducted by PricewaterhouseCoopers, it was recommended that MOREnet update reserve policies to reflect the current business model and risk environment. After staff discussions and advice received from the audit team, it was determined that when the MOR is greater than the PF balance, the PF balance should be subtracted from the MOR to determine the balance of the MOR required from program reserves.

Doennig moved to accept staff’s recommendation that the Council approve the described MOR funding. Klimczak seconded the motion and it passed unanimously.

DISCUSSION/INFORMATION ITEMS

Reserve and Ending Balances – Discussion

Greg Silvey reported that MOREnet would like to determine a plan to start spending down the reserve balances. The sponsors met last week and agreed to include Learning Express as part of the online resources funds that are set aside in the MOR. The option of giving credits to offset member fees was broached, however, Gillispie explained that staff doesn’t feel applying credits is a good option as that will not increase the viability of MOREnet and would cause the need for substantial fee increases in future years, which may in turn, accelerate member departures.

The Council asked that staff create a list of priority projects that the balance could be used to fund. Gillispie is concerned that there will be few projects that are consortium-wide, most will be regional. Care will need to be taken to ensure selected projects are those that will benefit the consortium as a whole. The Council felt that any project that benefits the whole network via equal Internet footing will be helping the entire consortium. John would like to see service costs reduced or members moved from T1s to Ethernet. The move to Ethernet would also allow MOREnet to assist in emergency situations when rapid bandwidth increases are available and necessary.

There was discussion regarding whether the program balance amounts should be taken into account in calculating the annual reserve balance. Klimczak indicated that he believed the balances should be combined into a single pool of dollars with some necessary phase-in, and used to help membership as a whole. Gillispie added that left over dollars on an annual basis could be given back to members via discounts or credits as MOREnet doesn’t want to generate more dollars than needed that would contribute to the reserve balance that we are trying to spend down.

A plan needs to be generated and shared with PricewaterhouseCoopers in January showing when and how the balances will be reduced.

Appropriation Request – Information

Gillispie reported that the Governor did not line item veto the $50,000 appropriated by the legislature for FY12, but he did withhold it. The OA expenditure restriction document stated that MOREnet does not need the funding due to the fact that members stepped up and covered their expenses. Those funds were going to be used to help members who currently pay more than the median cost per megabyte as compared with their membership group. MOREnet has submitted a New Decision Item for FY13 in the amount of $316,718 to assist those members.

Chair Conroy asked that Gillispie keep the Council posted as to whether the request is approved to move forward. Staff will provide a list of which members would/could benefit from the appropriation.

Other Business

Natasha Angell reported that the MPLD representatives for the Council have been identified, Klimczak will be reporting who will be the MERC representatives, and staff is trying to coordinate a meeting for the K12 advocacy group for later this month to identify their representatives.

Hank Niederhelm provided an update on the status of MOREnet’s facility move that is underway.

Meeting Schedule

A face-to-face meeting will be scheduled in July once new Council members are identified.

Chair Conroy adjourned the meeting at 8:53 a.m.

Respectfully Submitted by Sherry Loyd