MOREnet Council Meeting Minutes - March 3, 2009
March 3, 2009
Members present: Margaret Conroy, Chair, Margaret Cline for Gary Allen, David Doennig, Tim Gallimore, Rita Gulstad, Christine Hollingsworth for Bert Schulte, Debbie Hughes, Glenda Hunt, Craig Klimczak, Bill Mitchell, Tim Robyn
Alternates present: Mark Mabe, Mike Roling, Barbara Reading
Staff present: Natasha Angell, Chip Byers, Sherry Loyd, Debbie Rodman, Greg Silvey
Chair Margaret Conroy called the MOREnet Council meeting to order. Those who were in attendance are listed above.
Minutes of the December 9, 2008 MOREnet Council Meeting – Approval
Chair Conroy asked for amendments to the meeting minutes. Glenda Hunt moved to approve the December 9, 2008 minutes as distributed. David Doennig seconded the motion and it passed unanimously.
FY09 Mid-Year Reprojected Budget – Endorsement
Greg Silvey reported that there were changes in the FY09 actual revenues and expenditures from the FY09 original budget approved at the July 2008 MOREnet Council meeting. Revenues are up by $1,162,000, while expenses are lower at $1,277,000, for a net increase in revenues over expenditures of $2,439,000.
Craig Klimczak asked if the current University fiscal operating guidelines for expense reductions were too restrictive for MOREnet to be able to conduct their business and Mitchell replied that there is a process in place for exceptions, where needed, with President Forsee being the final approver.
Rita Gulstad moved to endorse the mid-year reprojected FY09 budget, including the transfer of FY09 non-program ending balances to the Plant Fund. Klimczak seconded the motion and it passed unanimously.
FY10 Cost Allocation Methodology – Endorsement
The Cost Allocation Methodology was last changed in FY07 to recognize a change in the nature of MOREnet operations, and to adjust for the FY06 cut in state appropriations. Additional changes are needed for FY10 to improve upon the current methodology and to produce a more resilient and reasonable approach to cost allocation.
The proposed Cost Allocation Methodology is based on the same goals as the current methodology with the addition of two goals:
- Account for the lower marginal cost impact of growth and larger capacity connections, in order to address issues of equity and competitiveness, and;
- Establish an approved mechanism for funding the PF replacement of capital assets.
The addition of these goals is to better address the tying of Shared Network costs to capacity growth, or the pricing in the telecommunications market, instead of to member capacity, and to simplify the calculation of program contributions to the Shared Network.
Mitchell reminded everyone that MOREnet assesses the fee the same for each program, however the collection process is left up to each program sponsor.
As part of the change to this proposed Cost Allocation Methodology, Shared Network support contributions from programs will no longer be based on 12/31 census data.
Also under this new methodology, each program’s Shared Network support contribution will be based on aggregate capacity for all circuits at each site. Connections to separate sites will be assessed individually.
Klimczak moved to approve the proposed Cost Allocation Methodology as presented. Doennig seconded the motion and it passed unanimously.
Fiscal Exigency Reserve (FER) – FY10 Assumptions and Estimate – Endorsement
A review of the FER is done annually, based upon agreed-to assumptions regarding the current state of expenses and income. The originally approved methodology assumed a 12-month network shut-down with an additional year of lagged E-rate to offset shut-down expenses. With the change in the E-rate accrual methodology there is no longer an additional year of lagged E-rate, nearly tripling the FER need estimated under the current methodology. Staff has decided that a 3-month network shut-down would be more appropriate during which time the only services provided would be connectivity related. These scaled down assumptions would leave $3,510,000 in the FER. The additional $510,000 needed for a quicker shut down is due to an original assumption made when deciding on the $3,000,000 that a second year of E-rate would be forthcoming.
Klimczak moved to approve the FER assumptions and estimate for FY10 as described and the $510,000 increase needed in the FER with the increase allocated to each program based on current (FY09) FER allocations, approximately a 17% increase for each program. Gulstad seconded the motion and it passed unanimously.
Preliminary FY10 Budget – Endorsement
Rodman reported that in the provided FY10 preliminary budget staff had assumed that the FY09 Mid-Year Reprojected Budget, the FY10 Cost Allocation Methodology and the FER agenda items previously discussed were going to be approved by the Council.
The FY10 budget resulted in an increase in revenues of $924,000, and an increase in expenses of $2,025,000 when compared to the Mid-Year Reprojected FY09 Budget, for a net decrease of revenues over expenses of ($1,101,000). Rodman reviewed each area in detail.
Mitchell explained that a preliminary budget is produced to be used by programs to set their fees with the understanding that changes may have to occur after final legislative action.
Klimczak moved to endorse the FY10 preliminary budget subject to final appropriations. David Doennig seconded the motion and it passed unanimously.
NGN Wavelength Management Agreement – Endorsement
Based on the current NGN implementation and projected University and MOREnet use, excess circuit and wavelength capacity will be available for other uses. Mitchell reviewed the proposed agreement which will determine how excess wavelength capacity will be managed going forward.
Klimczak moved to endorse the NGN Wavelength Management Agreement with MOREnet to inform the Council of any actions taken under this agreement. Gulstad seconded the motion and it passed unanimously.
MOREnet Council Goals
Chair Conroy reminded everyone that at the December Council meeting it was decided to move forward with the goals as provided and measure progress at the end of the year. At that meeting, there was also agreement on removing the action items and placing them in an action plan. Chair Conroy updated the goals document, which was provided in the meeting packet.
Doennig moved to endorse the MOREnet Council goals as provided. Klimczak seconded the motion and it passed unanimously.
FY10 Appropriations Update – Discussion
Governor’s Budget Recommendation
Mitchell reported that the House Appropriations-Education committee reported out using four quartiles and that MOREnet is in the top quartile. The committee has not yet made a final report to the full House Budget committee; however House Budget Chair, Representative Icet, has filed the budget bill with a recommendation that MOREnet receive a reduction of 10%. The universities and community colleges were recommended to receive flat funding but the use of the federal stimulus budget stabilization fund will be used to sustain those budgets.
DESE – HB2
Christine Hollingsworth reported that DESE will work with whatever budget received but that there is concern.
State Library – HB12
Chair Conroy reported that there haven’t been any questions about libraries as of yet. The Secretary of State was advised by a member of the House that he asked all elected officials take a 5% cut to their budget.
Mitchell will continue to meet with the House Budget committee members to gain support. There are some strong supporters on that committee. He will also be meeting with Senators on the Senate Appropriations committee once the bills move out of the House.
Economic Stimulus Package – Information
Mitchell referenced and did a brief review of a handout entitled Briefing on the American Recovery and Reinvestment Act of 2009 for Internet2. He shared it because it states the facts that are available. It is believed that the Governor wants a large coordinated proposal submitted from the State of Missouri. MOREnet is in the process of producing plans/scenarios to address the directions that might be taken, however, more guidance is needed.
Network Connectivity Fee Structure – Information
Rodman explained that based on the changes to the proposed Cost Allocation Methodology and the current estimates of revenues and expenses for FY10, this proposed Network Connectivity Fee structure has changed to a weighted model. The current fee structure is based on a flat fee per MB and is no longer sustainable because it does not accurately reflect how member capacity growth impacts costs for the Shared Network and does not reflect competitive market pricing. As discussed earlier in the meeting, there will no longer be a census date used as the basis of the Network Connectivity Fee. As organizations receive increases in capacity, Network Connectivity Fees will be billed for the increase. These fees will be based on aggregate capacity for all circuits at each site. Connections to separate sites will be assessed individually.
NGN Update – Information
Byers reported that Phase I, for the core fiber network, has been underway since August 2008 and is nearly complete. The Backbone Turn-Up Schedule provided in the meeting materials has been delayed by one week. It is having a positive impact on the cost allocations and MOREnet’s costs.
For the Phase II update he explained that there are two procurement actions that have been completed. One for the Northern Loop (St. Joseph, Maryville, Kirksville) which was where the most expensive circuit MOREnet had existed, and now costs in this area are comparable to metro pricing. The other procurement action allowed MOREnet to get better long term pricing for approximately 115 sites in the southern portion of the state.
There was discussion about the type of technology used and where, as well as, the economic development opportunity due to the 60+ communities now having a scalable technology in a non-metro area.
MOREnet Council Advocacy Project Update – Information
Natasha Angell gave an update on the MOREnet Council Advocacy Group that was convened in December to support the Council’s advocacy goal. Council members, as well as staff, have been active the past few months putting the implementation plan to action with outreach activities. The packet template that was handed out was approved by the advocacy working group in January and staff has been working with the designated Council members to prepare this final draft. The flip card was prepared to be a ready reference about MOREnet facts and figures and will hopefully be useful. Angell reviewed the packet and reported that a PDF packet for each program will be posted on the Legislative Resources webpage with an announcement made to the consortium. She asked the Council to share any comments and let them know that through this project, staff has obtained a great library of resources that all members are welcome to use.
REAL – Chair Conroy reported that the State Library is working to compile a list of needs that could be addressed through the Transform Missouri committee.
The State Library has received a list of libraries that have prequalified for the Gates Online Opportunities Hardware grant. The libraries in the state are eligible for between $700,000-$800,000 to be used for equipment for libraries. The libraries listed are now able to apply to the Gates Foundation for this two-year grant process. The State Library is getting the word out to get those libraries to apply.
Barbara Reading is heading a committee trying to develop a funding pool model for electronic resources as there is more need and interest for those resources than can be funded through the REAL appropriation. This model would hopefully allow libraries to subscribe to a database by contributing to the funding pool without having to pay the full price for all databases.
DHE – Tim Gallimore reported that DHE is involved in institutional budgets right now as well as MOREnet’s work on the stimulus package and what DHE can do to assist.
DESE – Hollingsworth reported that the Governor proposed a $1,000,000 decrease from the current level of $5,800,000 for MoVIP. He proposed $1,000,000 for the funding of the eMINTS-METS School Grants Program.
Continuing Resolution (CR) will level-fund Title II.D Enhancing Education through Technology (EETT) for 2009-10 at about $4,000,000 for Missouri and the President's American Recovery and Reinvestment Act (ARRA) will distribute additional, one-time stimulus funding through EETT at about $9,700,000 for Missouri. About 85% or $11,600,000 will be distributed to public schools [the other 15% covers state administration and the nonpublic school bypass contract]. Half of the flow-through funding will be distributed to districts via formula grants and half via competitive grants. Regardless of grant type, districts must use at least 25% for tech-related professional development.
The Governor also receives a large pot of “State Stabilization” ARRA funding, and DESE has submitted requests for additional funding for the EETT formula grant program and for MoVIP course development.
State – Tim Robyn reported that the Office of Administration is in full budget mode and is currently developing scenarios for what may or may not happen. Many of the scenarios might possibly increase the State’s need for MOREnet network services due to the possibility that a budget cut could affect content filtering and the use of Google search clients on websites.
- May 28, 2009 (conference call)
- July 30, 2009
- October 21, 2009
- December 15, 2009
Adjourned 1:45 p.m.
Respectfully Submitted by Sherry Loyd