Ha Ha Tonka Castle

MOREnet Council Meeting Minutes - May 3, 2011

TIME: 10:30 – 1:30 p.m., Tuesday, May 3, 2011
PLACE: State Information Center, Secretary of State’s Conference Room, 3rd Floor, Jefferson City, MO

Members present: Margaret Conroy, Chair, Gary Allen, Russ Brock, John Gillispie, Leigh Ann Grant-Engle, Rita Gulstad, Debbie Hughes, Rusty Monhollon

Alternates present: Mark Mabe, Barbara Reading, Deb Sutton, Cindy Youngblood

MOREnet staff present: Natasha Angell, 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 February 4, 2011 MOREnet Council Meetings – Approval

Chair Conroy asked for a motion to approve the meeting minutes. Russell Brock moved to approve the February 4, 2011 minutes as distributed. Mark Mabe seconded the motion and it passed unanimously.

MOREnet Internal Audit and Reserve Recommendations – Endorsement

John Gillispie referenced the final audit report that was distributed via email on April 5, 2011. Due to the last audit being conducted in 2006 and the amount of change that has occurred in the organization, Gillispie requested this audit. The audit was conducted by PricewaterhouseCoopers (PwhC) and they identified three recommendations:

  • Enhance MOREnet’s marketing and sales function through additional training and incentive programs aligned with the organization’s growth strategies.
  • The marketing and sales function needs to change due to the loss of HB3 making it necessary for members to now pay full costs. It was recommended that MOREnet incent and provide training to their Program Managers to grow membership.

  • Accelerate MOREnet’s revenue collections by improving the invoicing process.
  • MOREnet has developed policies and procedures related to invoicing their members in a timelier manner. In FY12, members will be invoiced by specified dates based on their program. Additional invoices will be sent to those who have circuit upgrades that incur additional costs. This process will allow MOREnet to invoice for all fees and pass-through charges at once and establish a more consistent invoicing schedule.

  • Update MOREnet’s reserve policies to reflect recent changes to their business model and risk environment so there is an agreed upon plan to optimize the organization’s use of available fund balances.
  • Gillispie reviewed the key areas identified by staff after a review of the FY11 year end fund balances based on third quarter reprojections; Plant Fund, Online Resources, and Working Capital. He then distributed two additional MOR vs. Plant Fund scenarios (with and without NewsBank databases) created by staff as a result of feedback received from Chair Conroy prior to the meeting. Chair Conroy believes the NewsBank databases portion of the service would be missed the least, should a cost reduction be necessary.

    MOSL does not expect a reduction to the REAL program’s HB12 appropriation for FY12, however, the Online Resource database service is a highly-valued service offering of the consortium and preparations should be made for the future possibility of HB12 being withheld. Chair Conroy believes there is a cancellation clause in the Gale and EBSCO contracts should the Online Resources appropriations be cut or withheld, however, staff believes membership will be lost without the service.

    Gillispie would prefer the 90 or 120 day MOR option due to the Anti-deficiency Act and the amount of E-rate monies that MOREnet pays out prior to being reimbursed approximately eight months later. Mabe expressed concerned that MERC members may leave if there is a fee increase. Three-year commitments were made with the thought that there would be no additional increases. Gillispie believes those who made a three-year commitment could still be locked in for the remaining commitment with the possibility of an increase being added on in additional years.

    Gillispie believes the reserve balances belong to the members, not to those program entities that oversee those members. Progress is being made in getting member rates consistent across the program entities and the financials need to be consistent as well. Mabe expressed reluctance to change the current process as there has never been an issue with the program groups working well together as a consortium. He feels the segregation has been working fine and there isn’t a need for change. Gillispie is concerned with staff having to work through three different agencies each time a new service offering/risk is identified. Not to mention that each member is now making decisions on their own so that requires communications to many more as well. In order to retain members, services are going to have to be enriched and to do this, processes may need to change.

    Member service options are growing outside of MOREnet and members are being contacted directly. At MOREnet right now member services and the network revenue are equal but the network is going to continue to decrease due to the other options that are becoming available and the falling service costs. Therefore, the member services side has to grow and in order to do that, investments have to be made.

    David Doennig made a motion that the discussion of the MOR shall include the databases. Motion failed.

    Leigh Ann Grant-Engle moved to approve a 120-day balance for the reserve. Doenning seconded. Rusty Monhollon amended the motion to be 90 days as Gillispie recommended. Grant-Engle accepted the amended motion. Doenning accepted the amended motion. A vote was taken and the motion passed with Mabe voting against the motion.

    Staff was directed to come back with suggested approaches on how the Online Resources costs could be split between the membership groups based on utilization, number of members, etc. The Council will then decide how to proceed.

    What to do with the remainder, currently held in reserves, after the final MOR amount is determined will be dealt with next time as well.

DISCUSSION/INFORMATION ITEMS

MOREnet State Appropriations – Discussion

State Library – HB12 Requests

Chair Conroy anticipates the HB12 appropriation staying intact for FY12.

HB3

Gillispie asked the Council for suggestions on how to spend the $50K line item added by the House of Representatives, if it survives the legislative process. He suggested targeting those members in the most need, possibly by offering a subsidy to those with the highest telecommunications costs. Another suggestion was helping members who are at risk of leaving the consortium or those who have already decided to leave. Chair Conroy asked that further suggestions be sent to Gillispie.

MOREnet Council MOU Implementation – Information

Natasha Angell updated the Council on the amended MOU implementation process. All advisory committees should have their MOREnet Council members identified before July 1, 2011. There will be an orientation session, as well as a face-to-face Council meeting in July. Chair Conroy asked that MOREnet schedule a meeting with her prior to July to discuss logistics for that first meeting.

MOREnet Membership Update – Information

FY11 Membership Status

Angell reported that no additional membership cancellations have been received since the report given at the December 14, 2010, meeting. She also reported that a second private school, Barat Academy, has joined the consortium.

FY12 Membership Planning

Angell reported that as of March 1, 75% of the members have responded to the FY12 Membership Planning Survey. The surveys show that the majority plan to retain membership services and circuits in FY12, however, they are not committed by their response. The majority of potential service cancellations are from public K-12 school districts.

As of April 29, staff has sent 95% of the FY12 service quotes to members. Acceptance of these electronic quotes includes transferring any early termination penalties that might apply to the members, now that MOREnet can no longer carry that liability. Quotes need to be authorized by May 27 and members must confirm their service needs by June 1. MOREnet will begin invoicing July 1.

MOREnet Business Model – Information

MOREnet has experienced a dramatic impact to its operational business model over the past two years. Gillispie reviewed the changes that have occurred and explained that MOREnet needs to identify new differentiator(s) but is struggling with how to select and promote them. MOREnet has not been a risk-taker in the past and he fears that quick analysis is needed or there is risk of missing opportunities. He questioned how involved the Council wants to be in these technology-based service offerings. Chair Conroy expects that whatever new service offerings become available, that the same network and Internet support will remain. Mabe requested an update on the recent new service offerings and Gillispie agreed to provide this.

MOREnet Move Update – Information

Gillispie and Hank Niederhelm reported that walls have been built in the new building and that contractors are currently working to install the HVAC system. The move is expected to occur mid-June. Further updates and a PowerPoint presentation are to be shared via email.

Other Business

Chair Conroy presented Debbie Hughes a plaque for her years of service on the Council. She is retiring on June 30, 2011.

Meeting Schedule

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

Chair Conroy adjourned the meeting at 1:50 p.m.

Respectfully Submitted by Sherry Loyd