MERC

MERC Board of Director’s Meeting

Aug. 9, 2006, 9:30 a.m - Noon

Attendees

Gary Allen, Beth Fisher, Rita Gulstad, Russell Helm, Craig Klimczak (video), Joel LaReau, Mark Mabe, Bob McGlasson (video), Craig Shepherd,  Robert Stein

MOREnet Staff: Chip Byers, Jennifer Doll, Bill Mitchell, Nancy Piringer

Welcome and Opening Remarks – Russell Helm

Helm opened the meeting and introduced Beth Fisher, the new MOBIUS Executive Director. Helm then introduced Jennifer Doll to the group who addressed MERC Financials.

MERC Financials – Jennifer Doll

Doll began the financials update by reviewing the MERC Financial report for the year ending June 30, 2006. Doll stated there was little deviation from the budget. The largest deviation within the revenue section was the transfer to the HELIX Conference. $20,000 had been budgeted, however only $7,487 was needed. That increased overall revenues by about $14,000. Personnel expenses came in under budget by about $20,000 due mainly to transitioning employees and lower salary & benefit increases than expected. Within the Other Expenses category, actuals came very close to the budgeted amounts. About $230,000 of fees were funded by the fund balance. Not as much of the fund balance was used as was anticipated in the budget. The year ended with $330,284 in the fund balance. Doll noted that the numbers are preliminary because the University is still working on closing the books but no major changes are expected.

Doll moved on to the HELIX Conference Financial Report and stated that conference fees were close to expected, and pointed out that the revenue transfer from MERC was much less than budgeted, only $7,487 was needed of the $20,000 allowed in the budget.
Salaries and benefit expenses for personnel involved in holding the conference was close to budget. Other expenses were 12.5% lower than budgeted due to savings on meals and food provided during the conference. The financials for the HELIX conference were balanced with a transfer from MERC and the end of the year fund balance is zero.

Doll began with a review of the proposed FY07 MERC budget. Member fees are listed at 1,299,982 while the Shared Network Funding Assessment (referred to as the “Funding Shortfall in FY06) that goes to the Shared Network is ($942,988). The Connection Related Fees are fees for those members with more than one circuit (connection) and stand at $34,400 in the proposed budget. The proposed revenue transfer to the HELIX Conference is listed as ($9,868). Personnel expenses and other expenses (training, member meetings, and member related services ) are close to the prior year. Overall the year would end with revenue exceeding expenses, so the fund balance would increase by about $15,000. One item to note is the Fiscal Exigency Reserve of $90,000. The FER was discussed at the last MOREnet Council meeting.

Doll asked for questions regarding the proposed MERC FY07 budget and hearing none asked the Board to approve the budget. Klimczak seconds the motion. Hearing no objections, the motion is carried.

Doll moved on to the HELIX 2007 Conference proposed budget. Conference fees are projected at being a little bit higher than the prior year, the revenue transfer from MERC is about $2,000 more than the actual transfer from FY06. Proposed member meeting expenses are close to FY06 expenses at $27,312.

FY08 Membership Fee Scenarios – Jennifer Doll

Helm began the discussion of the FY08 Fee Scenarios by stating that the fee scenarios were based on looking at what proportion of fees would be based on membership and what proportion would be capacity (bandwidth) based. Transitioning into a new fee structure was also a consideration in coming up with the fee scenarios.

Doll continued the presentation of the Fee Scenarios by reminding the Board that prior to receiving the agenda they had received a document reviewing the draft FY08 Fee Structure Modeling background information. Doll stated that the FY08 Fee Structure discussion started with a review of what MERC membership fees covered. The membership fee covers connection management services, program management services, member network support, training, and online resources. Doll stated that in order to cover those services that about $360,000 had to be collected from member fees.

During FY07 student FTE data was used and there were three tiers of member fees and ended up for FY07 collecting about $667,000 in member fees. That was the starting place of the fee structure discussion: that membership fees were based more on student FTE than bandwidth usage. Almost $300,000 more is being collected in membership fees than is actually needed in order to pay for membership fee services, so what is needed is something like a bandwidth fee that would go towards support of the shared network. The idea then was to go towards only collecting  $360,000 in membership fees in the form of a flat fee to $5,500 per member. There are 67 MERC members and the fee would provide about $360,000. However the change in fees would be significant. Many institutions would see a large increase or decrease.

Rather than do this in one year, the change was spread over three years, decreasing total collected membership fees by about $100,000 each year. This idea is represented by the first model, where the change is capped at 10%. The first model would still be largely based on FTE data collected during fall of 2005. In this model institutions with less than 1,500 FTE would pay $5,500, an FTE count between 1,501 and 5,000 would pay $9,000, and institutions with an FTE of greater than 5,000 would pay $13,400. This would decrease the total membership fees collected by about $100,000. Then to make up the dollars lost by decreasing the membership fees, a $605.00 fee per Mb fee would be charged and the per Mb fee would go towards paying for the shared network. This fee scenario is based on an institutions bandwidth as of 12/31/2005. The bandwidth data will be updated to 12/31/2006. This model shows a decrease in fees for a substantial number of schools due to the change in philosophy of basing fees on bandwidth rather than student FTE. By 2011 all institutions would be at a flat membership fee of $5,500. This first model did not meet the requirement of holding all institutions to a 10% change.

The question of how to achieve that requirement led to model two, where all institutions are held to a change of no more or less than 9%. The tiers of fees based on FTE information remained as model one. There were a number of institutions that had an increase of more than 9% and a premium was added in order to bring their change down to the 9%. They would be assessed slightly more than other institutions in order to hold their increase to a reasonable level. Doll points out that St. Louis University and Webster University do not pay a bandwidth fee now, so they would have a large premium. Under this scenario there would be few schools with a minor increase well below 9%. These schools are Missouri State University, Missouri Western, University of Missouri – Columbia, and University of Missouri – Rolla. Their increases are below 9%, with the highest being 2.34%. Overall, for FY07 fees would bring in $1,300,000. The fee scenario is based on needing to raise $1,250,000.

Helm asked the Board how they felt about adopting either one of the models presented. Shepherd stated that he likes the second model that limits change in total fees to no more than plus or minus 9%. Shepherd motions to adopt the 9% fee structure for FY08, Gulstad seconds the motion and hearing no objections the motion passes.

MOREnet Council Fiscal Exigency Reserve Fund - Rita Gulstad

Gulstad reminded the Board that prior to the meeting they should have received a memo reviewing background information on the discussion of the Fiscal Exigency Reserve Fund during the last MOREnet Council meeting. Each sponsor group met during that meeting and settled on an amount they thought was fair that could be contributed to the FER. The MERC group (Rita Gulstad, Cheryl Bielema, and Don Doucette) decided that about one third of MERC reserves (about $100,000) could be contributed to the FER. Other sponsor groups contributed their shares to the FER and in the end MERC agreed to contribute $90,000 to the $2.9 million FER. Gulstad asked the Board and Chair to approve the MERC contribution to the FER fund. Helm approves the contribution as part of the FY07 budget.

Representation on the MOREnet Council  - Russell Helm

Helm addressed the issue of MERC representation on the MOREnet Council. Helm suggested it may be good to rotate the MERC representative on an annual basis. Stein has spent time with the MOREnet Council both as an alternate and a Board member. Stein stated that the MOREnet Council would welcome any recommendation from MERC, however he pointed out that higher education seats on the MOREnet Council are appointed by the Commissioner of Higher Education. It was decided during the first year of the MOREnet Council that at least one seat would be a representative from MERC. At that time the Council chose to appoint the MERC Chair to that seat. Stein stated that he feels the Council likes the idea of the Chair sitting on the Council as an alternate  and then moving to a voting seat in order to provide continuity through the two year term. Russell Helm is currently an alternate on the MOREnet Council and Rita Gulstad is beginning a two year appointment as a voting member.

MERC Goals - Rita Gulstad

Gulstad reported that she and Piringer have worked to review the MERC Goals. An issue that was discussed in depth was the relationship of MERC with the MOREnet Council as it relates to governance. Gulstad and Piringer added a second bullet under section II of the MERC Goals addressing the relationship of MERC with the MOREnet Council and tweaked some of the wording in the opening paragraph. Gulstad submitted the current draft of the MERC Goals to the Board for discussion. Helm agrees with Gulstad that the Goals provides targets that MERC can move towards achieving. Helm stated he felt the document should be taken to the Institutional Representative for review and adoption. Shepherd moves to take the MERC Goals document to the Institutional Representatives for adoption. Mabe seconds the motion. Mitchell asks the Board to reconsider the phrase “operational budget and decisions”, located in the last sentence of the opening paragraph. Replacing those words with “strategic direction” is proposed and accepted. Helm moved to accept and adopt the MERC Goals, no objections were heard and the motion passed.

NGN Update - Bill Mitchell

Mitchell began the update by explaining that MOREnet had decided on a multiphase approach to the implementation of the Next Generation Network. The first phase is to upgrade the current backbone from 622 Mb to 1 Gig. Mitchell reported the bids are back on that step and an award has been recommended to procurement. Installation could be as early as November but probably no later than January of 2007. Phase two of the project is to look at acquiring fiber along I-70 between the Kansas City and St. Louis metro areas since the vast majority of traffic occurs there. This would greatly increase the capacity of the network, and MOREnet is hoping that the fiber could be lit up by January of 2008. The fiber would be leased from SURA (Southeastern Universities Research Association). AT&T donated between 5,000 and 7,000 miles of fiber to be used by research based organizations. MOREnet has applied for a pair of fiber. There is no charge for the fiber other than paying for it’s maintenance and operations costs. Verbal approval has been received, and a written agreement is not too far away. Mitchell reports that MOREnet will be bringing in a consultant from the California Education Network to help with the implementation and also to help examine the possibility of extending the entire backbone. The report from the consultant is expected no later than November, 2006.

CALEA Update - Bill Mitchell

Mitchell stated that the FCC’s ruling effectively allows CALEA (wiretapping) to be applied  not just to phone lines but also internet lines. Last week a California group (cenic – the Corporation for Education Network Initiatives in California) filed a lawsuit against the FCC claiming there is no lawful basis for CALEA to apply to internet access. Mitchell added that there is already existing law in place to allow internet wiretapping by request of law enforcement, CALEA however would allow remote/distant access. Mitchell reports to the Board that an organization is exempt from being CALEA compliant if it is considered a private network and does not support the internet connection of a private network. This probably means that MOREnet will need to be compliant at gateway routers that connect out to the internet. The deadline to become compliant is May 14, 2007.

Legislative Update - Bill Mitchell

Mitchell reported that MOREnet received a 1% increase in funding for FY06, and that there was debate in the House Committee over whether to increase funding by 1% or 2%. Mitchell thanked MERC and it’s members, both institutions and individuals for their advocacy and support of MOREnet. The MOREnet Council has recommended an FY08 appropriation request of $870,000 for ongoing costs and increasing growth. The University has put in a cost to continue request for $430,000 and an additional request for $1,000,000 for equipment. The coordinating board meeting will occur in October at St. Charles Community College where the recommendation is finalized. The recommendation will then go to the governor and the general assembly.

Fall Institutional Representative Meeting plans - Nancy Piringer

Piringer began by letting the Board know the date for the Fall IR meeting has been set for Wednesday, November 8th, 2006. The meeting theme will be “Business Continuity: What’s Your Plan?”. Piringer has spoken with Bill Rider who is the manager for Data Security and Disaster Recovery at Johns Hopkins Hospital & University in Baltimore, MD about the possibility of being the keynote speaker for the event. Piringer asked the Board to set a dollar amount that would be available for payment of a speaker like this. Shepherd offers a motion that $2,500.00 be authorized by the Board for the speakers expenses. Gulstad seconds the motion and all are in favor, motion passed.

HELIX Conference 2007 Update - Nancy Piringer       

Piringer thanked Joel LaReau for his help in planning so far. The conference will be held March 29-30, 2007 at Tan-Tar-A, Lake of the Ozarks and the theme will be “Advancing Technologies: Pushing Boundaries”. The goal with the theme is to follow up on what was presented by last years keynote speaker, Paul Hagner that talked about the digital age learner and how they impact institutions in terms of teaching and supporting students. Piringer has had preliminary conversations with Larry Johnson, who is the Executive Director of The New Media Consortium. The New Media Consortium puts together a report once a year that looks out over the next five years identifying developments in technology that they think will impact higher education. The 2007 Horizon report will be available for review during the HELIX 2007 conference. Piringer has asked Mr. Johnson if he would be interested in possibly presenting at HELIX 2007 and he is open to the idea. Piringer stated she had talked with him tentatively about payment – certainly travel costs could be covered however she was not certain about how much could be offered in terms of a speaker fee since MERC is a non-profit group. Piringer also suggested to the Board that a panel discussion might provide a good way to explore the theme further, and suggested that Larry Johnson be invited to lead the panel. Piringer asked the Board for their input on an amount of funding that might be used to pay a keynote speaker.

Helm pointed out to the Board that earlier in the meeting when Doll reviewed the finances for the HELIX conference that it was listed to as a report and the budget was not actually approved. Doll had reported that $9,868 was being budgeted for HELIX 2007. Klimczak stated that he would like to see a maximum of $20,000 made available for the HELIX Conference. Gulstad seconds the motion, and said that HELIX is one of the major perks that MERC gives it’s members each year. Helm asked for objections against allowing a line item in the budget for up to $20,000 for HELIX, hearing none the motion was passed.

Helm asked if there were other items not on the agenda to be brought forward. Hearing non, the meeting is adjourned at 11:35 a.m.