OREGON MASTER OF SOFTWARE ENGINEERING

Introduction

Three Oregon University System (OUS) institutions -- OSU, PSU, and UO -- and the Oregon Graduate Institute of Science and Technology (OGI) propose to jointly offer the Oregon Master of Software Engineering (OMSE) degree program. Offered by the computer science departments of the four partner institutions and administered by the Oregon College of Engineering and Computer Science (OCECS), the program will begin fall 1998 in Portland, and will be extended via distance delivery to the OSU and UO campuses and, potentially, to other Oregon locations.

Staff Analysis

1. Background

The impetus for the program began with the Report of Findings produced by a consortium consisting of Intel, Tektronix, Sequent, and Mentor Graphics, in which the need for advanced education leading to enhanced technical skills and competencies in software engineering was detailed. While each of the participating schools employs two or three faculty who specialize in teaching and research in software engineering, none of the institutions has the critical mass of faculty to design or implement such a program on its own. As the institutions worked together to develop the OMSE, dialogue with industry continued -- through the Industry Council (established by the Board of Higher Education in December 1996), the consortium's software Advisory Group, the Software Association of Oregon, the American Electronics Association, and through technology-company focus groups interviewed by the Oregon Survey Research Laboratory. In addition to strong industry participation, the program received initial approval by the Board of Higher Education (program preproposal in May 1996), and support from the 1997 Oregon Legislature, which allocated $2.25 million under SB 504 toward this effort.

2. Description

The OMSE is a professional degree program designed to provide the breadth of technical and organizational skills and knowledge required for success in a career as a software engineer. Students will likely be practicing software engineers, and typical graduates will be prepared to work as project leaders or senior technical contributors in a software development effort. Although designed as a full degree program, it also supports professional development needs of those not seeking a degree.

The following principles guided program design:

Development of the OMSE curriculum was informed by Oregon software engineering faculty, other MSE programs, and Oregon industry. Consequently, the curriculum focuses on the following areas: disciplined development, product-centered development, use of market-leading technology, professional competency (which includes communication and teamwork skills), and understanding of the business context.

To earn the OMSE degree, students must complete 48 credits. In lieu of a thesis, six credit hours of the curriculum are devoted to a practicum in which student teams apply their learning to a real software engineering project that may be industry sponsored or at a "virtual company." Each course will have a list of measurable outcomes expected of all students completing the work. Over the past year, intensive faculty effort was committed to development of new core courses by faculty from the four participating institutions.

Students will be admitted to one of the four institutions as well as to the program itself. Because most OMSE students will be working full time, delivery of the courses will be scheduled at times and places that best meet the needs of working professionals. It is anticipated that, in the third year of program implementation, enrollment will have built to the equivalent of 100 full-time students.

3. Evidence of Need

The Oregon Department of Labor has reported that Oregon will need about 7,000 new graduates in science and engineering in the next ten years. A large portion of these graduates will need to be prepared to work as software engineers in Oregon's burgeoning software engineering industry. Demand is high on the West Coast for software workers; employment projections rank computer/data processing industry growth as second only to the health care professions (Bureau of Labor Statistics). Oregon business spokespersons indicate that the growth of new software businesses is constrained by the availability of software engineers.

4. Adequacy of Resources

The legislative allocation ($2.25 million) will be used for start-up and operational expenses through June 1999. Total recurring costs are estimated at $2 million per year, to be met through continued state funding. The OMSE program will pay the four participating computer science departments course design and course delivery fees, which may be used to hire additional faculty for the program. A search is currently underway for a program director and assistant director, who will oversee implementation, ensure quality, and help maintain communication among the participating departments.

Program Review

At present, both OGI and PSU have completed their campus review and approval processes and are ready to admit students to the program. Reviews have been initiated at OSU and UO, with actions expected during the 1998-99 academic year. An external review of the program was conducted in June 1998. The reviewers concur that there is a critical need for such a program in Oregon, and believe that the institutions involved are able and committed to deliver such a program. A number of suggestions were made relating to the importance of the applied nature of this degree, both in terms of the type of students to be served and the balance of academic training and industrial/consulting experience of the faculty. Those involved in the design of the program have already begun to make program modifications in response to the external review recommendations.

The OUS Academic Council positively reviewed this program at its July 1998 meeting.

Staff Recommendation to the Executive Committee

Staff recommended that the Executive Committee authorize establishment of the Oregon Master of Software Engineering (OMSE), to be implemented by OGI and PSU, effective fall 1998, with implementation by OSU and UO to follow upon completion of campus processes. A follow-up review of the program will be conducted by the OUS Office of Academic Affairs in the 2003-04 academic year.

Executive Committee Discussion and Action (August 21, 1998)

Vice Chancellor Clark provided a background of the program, which was initiated by funding allocated through Senate Bill 504 in the 1997 Legislature. She described the target audience for the program as professionals who have bachelor's degrees in related fields; the OMSE will provide people with advanced skills to better meet the demonstrable needs of technology related industries in the state.

Vice Chancellor Dryden reported that the program should be self supportive by the next biennium, adding that, "with the registrations so far, this is indeed a possibility."

Both Chancellor Cox and President Imeson commended the efforts of those involved in the rapid development of this program, which will better meet market demands. "The collaboration has been great," said Mr. Imeson.

Ms. McAllister motioned and Ms. Wustenberg seconded the motion to approve the program as submitted. Those voting in favor: Directors Aschkenasy, Christopher, McAllister, Wustenberg, and Imeson. Those voting no: none.

BOARD ACTION:

B.S. IN FISHERIES & WILDLIFE SCIENCE, OSU

Introduction

Oregon State University requested authorization to consolidate two existing degree programs (B.S. in Fisheries Science and B.S. in Wildlife Science) into a single degree, B.S. in Fisheries and Wildlife Science, effective fall 1998. This consolidation would also reduce the six specific degree options to a single specialty option.

Staff Analysis

1. Rationale

Currently, the two degrees share a common core and differ by as few as 25 credits. The move to a single degree reflects changes in the professions, which emphasize commonalities in the science and management of wild animal resources. The change in options provides students the opportunity to examine their career goals and put together a coherent course of study to support those goals rather than just select one of six specializations. Students in this degree program will be prepared to succeed in complex, multidisciplinary work environments. They will understand fisheries and wildlife resources, as well as the ecosystems with which they interrelate.

2. Program Description

The 180-credit-hour requirements include a fisheries and wildlife core (103-115 credits), a specialty option (41-53 credits), and an internship/"experience" requirement (4-6 credits). The student's specialty option plan, developed prior to the junior year and approved by faculty, is intended to support their career goals. The two "experience activities" are required for graduation, at least one of which must be substantial (minimum three credits). The goal of this requirement is for students to apply the concepts, principles, and skills acquired in the classroom to a professional, real-world context. Additionally, students will gain an understanding of the structure and functions of natural-resource organizations. A three-term sequence in group problem solving has been developed in which a group of six to ten students is presented with a real, multifaceted conservation problem to resolve. Faculty, teamed with natural resource professionals, will serve as mentors.

3. Adequacy of Resources

Only four new courses need to be developed for this program; all other courses are currently being offered. No new resources are required to offer this program. In recent years, the undergraduate programs have enrolled 230 to 270 students annually, graduating 40 to 70 students each year. The programs have been in a stable or slow-growth pattern for the past ten years.

Program Review

The proposed program has been reviewed positively by all appropriate institutional committees and the Academic Council.

Staff Recommendation to the Executive Committee

Staff recommended that the Executive Committee authorize Oregon State University to consolidate two existing degree programs (B.S. in Fisheries Science and B.S. in Wildlife Science) into a single degree, B.S. in Fisheries and Wildlife Science, effective fall 1998, with a follow-up review of the program to be conducted by the OUS Office of Academic Affairs in the 2003-04 academic year.

Executive Committee Discussion and Action (September 18, 1998)

Vice Chancellor Clark overviewed the program consolidation. Provost Arnold noted that the impetus for this was the hiring of a new department head, who in turn, led a review of all programs. This review process involved input from the public sector, alumni, focus groups, and an advisory committee. "One observation was that the existing series made students almost too narrowly focused," explained Dr. Arnold. "People wanted a broader ecosystem perspective. This is an effort to make the program stronger and offer more flexibility to the students," he concluded.

"In this consolidation, is there any cost improvement?" asked Dr. Aschkenasy. Dr. Arnold pointed out that it remains an underfunded program, even with the new model. Responding a question from Ms. Christopher regarding enrollment goals, Provost Arnold replied, "The goal is to maintain the enrollments. Many students are interested in the program, yet there are practical limitations."

Ms. Wustenberg commented that in the department there is now a real emphasis on ecosystem management. The consolidation of these programs falls in line with that focus.

Ms. McAllister moved and Dr. Aschkenasy seconded the motion to approve the program consolidation as submitted. Those voting in favor: Directors Aschkenasy, Christopher, McAllister, Wustenberg, and Imeson. Those voting no: none.

BOARD ACTION:

RESOLUTION FOR THE SALE OF ARTICLE XI-G AND ARTICLE XI-F(1) BONDS

1998 Fall Bond Sale for Capital Projects
Four Campuses Served with Seven Individual Projects; Six Systemwide Allocation Projects
All Projects Approved by the Board and Legislative Assembly
A Total of $37,989,000 Recommended for Sale

Staff Report to the Board

Background. The 1997 Legislative Assembly authorized the Board of Higher Education to issue general obligation bonds, in specified amounts by fiscal year, with the proceeds to be used to finance capital construction and facilities repair and renovation projects in higher education. These bonds were authorized under two sections of the Oregon Constitution, Article XI-G and Article XI-F(1).

Article XI-G bonds are issued to construct and repair facilities classified as Education and General use, including classroom facilities, libraries, teaching laboratories, and general administrative space. These bonds are matched by an appropriation from the state General Fund and are general obligations of the state; the debt service is paid from the General Fund. The legislature established a mechanism whereby the General Fund match may be generated through gifts and federal and local governmental funds. These are first deposited to special project accounts in the Treasury and then treated as General Fund moneys for purpose of the match. Such accounts were permitted by the legislature to be established for the UO Campus Development Project (Phases II and III), PSU Urban Center, Phase I, WOU Library, and SOU Center for the Visual Arts.

Article XI-F(1) bonds are issued to construct and repair facilities that are self-financing and self-supporting as determined by the Board, in accordance with Article XI-F(1) of the Oregon Constitution. Bonds of this type have been issued to cover projects for the construction and renovation of auxiliary enterprises space (such as parking facilities or student housing) where the source of debt service is from auxiliary funds. Bonds have also been approved for projects in student facilities (such as student unions, student health facilities, or student recreation facilities) where the debt service is repaid from the student building fee or from a special fee approved for this purpose by the Board. The preponderance of bonds sold for capital construction in higher education has been under Article XI-F(1).

1997-1999 Higher Education Bond Bill Authorization. House Bill 5036, Chapter 556, authorized a maximum issuance of $34,299,500 of Article XI-G bonds and a maximum issuance of $136,000,000 of Article XI-F(1) bonds this biennium. To date, a total of $44,298,895 of bonds have been sold of which $14,122,702 have been Article XI-G bonds and $30,176,193 have been Article XI-F(1) bonds.

Request for Board Authorization to Issue. The institutions are now seeking authorization from the Board to issue a total of $37,989,000 in bonds, as part of a sale currently planned by the State Treasurer for September 1998. Of this amount, a total of $7,865,000 is requested in Article XI-G bond authorization and a total of $30,124,000 in Article XI-F(1) bond authorization. All projects to be financed by these bonds have been authorized by the legislature or the Emergency Board of the legislature.

Bond issuance costs estimated at two percent will be charged against each project for which bonds are sold under this sale. Prior to sale, the Board's bond counsel may designate a portion of the sale as taxable, owing to space utilization by private entities in the projects to be financed under this sale. At present, the percentage of the total square footage for private use affected under this sale is not sufficient to cause any portion of the sale to be taxable.

Several tables are provided herein:

Table A, included in the Resolution, identifies the Article XI-F(1) projects recommended for the Fall 1998 Bond Sale.

Table B, also included in the Resolution, identifies the Article XI-G projects recommended for the Fall 1998 Bond Sale.

Four tables are provided after the Resolution, to display information on debt service issues:

Table C displays the amount of Article XI-F(1) bonds to be sold, as well as the estimated annual debt service requirements associated with the projects proposed to be included in the Fall 1998 Bond Sale, by campus and Systemwide.

Table D compares the total Article XI-F(1) bonded debt outstanding as of June 30, 1998, Fiscal Year End, to the increment associated with the Fall 1998 Bond Sale, by auxiliary category and repayment sources.

Table E displays information on Article XI-G bonded debt, beginning with 1991-1993, through 1997-1999, assuming approval of the proposed Fall 1998 Bond Sale. It compares the amount of the debt service paid with the total biennial budget for E&G all sources and General Fund E&G.

Table F projects annual Article XI-G bonded debt outstanding and annual debt service beginning with the 1997-1999 biennium through 2004-2005, assuming approval of the proposed Fall 1998 Bond Sale.

In addition, summary information on each of the 14 projects included in the proposed sale is provided in a supplement to this item (on file in the Board's office).

Resolution for the Sale of Bonds for Capital Projects

The Resolution before the Board authorizes staff to pursue the sale of bonds for all projects currently identified by the campuses as needing bond funding consistent with the overall bond limitation imposed by the legislature for the period 1997-1999. With this sale, a total of $21,987,000 of Article XI-G bonds and $60,300,193 of Article XI-F(1) bonds will have been sold during the biennium.

Staff Recommendation to the Executive Committee

Staff recommended that the Executive Committee: 1) find that the projects for which Article XI-F(1) bonds are proposed meet the self-liquidating and self-supporting requirements of Article XI-F(1), Section 2, of the Oregon Constitution; and 2) adopt the following Resolution for authorizing the sale of Article XI-G and Article XI-F(1) bonds for capital projects.

Executive Committee Discussion and Action (September 18, 1998)

Vice Chancellor Anslow, while reviewing the docket item, reminded Executive Committee members that the Board previously approved all projects in the sale.

Ms. Wustenberg, referring to Table F, asked how the annual debt service is projected. Mr. Anslow responded that the vast majority of bonds have already been sold, and that "these are real numbers" based on total bond debt service for outstanding bonds plus the projected amounts for the new bonds to be issued in this fall sale.

Ms. Christopher inquired about PSU's public health and environmental lab. Ms. Lanier explained that this was a new building project approved by the Board a couple of years ago. The Department of Environmental Quality (DEQ), currently tenants in the science building, have planned to move to the new PSU public health building as tenants upon its completion. However, DEQ's plans are now somewhat uncertain so contingency plans have been created in which the bond proceeds to be issued for this project ($6.1 million) would be applied instead to another approved capital project, the exercise of an option to purchase Phase II of the USWest Building. "OUS's bond authority is such that we can apply proceeds to the PSU/DEQ project or exercise the option to purchase the remainder of the USWest Building," said Ms. Lanier. "Under current project plans, the cost is essentially the same."

Ms. Christopher moved and Ms. Wustenberg seconded the motion to approve the Resolution as submitted. Those voting in favor: Directors Aschkenasy, Christopher, McAllister, Wustenberg, and Imeson. Those voting no: none.

BOARD ACTION:

RESOLUTION FOR THE SALE OF BONDS FOR
CAPITAL PROJECTS

WHEREAS, ORS 286.031 states, in part, that the State Treasurer shall issue all general obligation bonds of this state after consultation with the state agency responsible for administering the bonds proceeds; and

WHEREAS, ORS 286.033 states, in part, that the state agency shall authorize issuance of bonds subject to ORS 286.031 by resolution; and

WHEREAS, ORS Chapters 351, 288, and 286 provide further direction as to how bonds are sold and proceeds administered; and

WHEREAS, House Bill 5036, Chapter 556, Oregon Laws 1997, establishes Oregon Constitution limitations on the amount of bonds that may be sold pursuant to Articles XI-G and XI-F(1) for the 1997-1999 biennium; and

WHEREAS, Senate Bill 5536, Chapter 584, Oregon Laws 1997, lists those projects that may be financed pursuant to Articles XI-G and XI-F(1); and

WHEREAS, it is appropriate for this Board to authorize the State Treasurer to issue bonds for projects authorized by Senate Bill 5536 and in amounts not greater than authorized by House Bill 5036 and for other projects as may be provided by law and as otherwise required by law for the 1997-1999 biennium without requiring further action of this Board;

NOW, THEREFORE, be it resolved by the Board of Higher Education of the State of Oregon as follows:

Section 1. Issue. The State of Oregon is authorized to issue general obligation bonds (the "Bonds"), in such series and principal amounts as the State Treasurer, after consultation with the Vice Chancellor for Finance and Administration of the Department of Higher Education, shall determine are required to fund projects authorized by Oregon law. The Bonds shall be designated, dated, authenticated, registered, shall mature, shall be in such denomination, shall bear such interest, be payable, be subject to redemption, and otherwise contain such terms as the State Treasurer determines, including the designations as Oregon Baccalaureate Bonds, after consultation with the Vice Chancellor for Finance and Administration. The maximum net effective interest rate for the Bonds shall not exceed ten percent per annum.

Section 2. Article XI-F(1) Projects. Bonds are authorized to be sold to provide funds for projects and may be authorized by the Oregon legislature and may be revised by the Vice Chancellor for Finance and Administration as authorized by Oregon law.

Table A - Article XI-F(1) Projects Recommended for Fall 1998 Bond Sale

Article XI-F(1) Projects

Estimated Bond Cost, Including 2% Issuance Costs

Term

Systemwide: Repair & Renovation

$3,060,000 15 years
Systemwide: Safety Improvements 1,020,000 20 years
Systemwide: ADA/Accessibility 566,000 20 years
Systemwide: Seismic Improvements 1,270,000 20 years
Systemwide: Land Acquisition 1,020,000 30 years
Systemwide: Project Reserve Contingency

794,000

30 years
OIT: Residence Hall Improvements 224,500 15 years
OSU: Residence Hall Improvements 2,963,000 30 years
OSU: Warehouse Addition 561,000 30 years
PSU: Urban Center 3,560,000 30 years
PSU: Public Health/Environmental Lab 6,171,000 30 years
UO: Recreation and Fitness Center 5,243,000 30 years
UO: Knight Law Center 3,672,000 30 years
TOTAL XI-F(1) Projects $30,124,000 NA


Section 3. Article XI-G Projects. Bonds are authorized to be sold to provide funds for projects and may be authorized by the Oregon legislature and may be revised by the Vice Chancellor for Finance and Administration as authorized by Oregon law.

Table B - Article XI-G Projects Recommended for Fall 1998 Bond Sale

Article XI-G Projects

Estimated Bond Cost

Term

PSU: Urban Center

$7,865,000 30 years
TOTAL XI-F(1) Projects $7,865,000 NA

Section 4. Maintenance of Tax-Exempt Status. The Board covenants for the benefit of the owners of the Bonds to comply with all provisions of the Internal Revenue Code of 1986, as amended (the "Code"), that are required for Bond interest to be excluded from gross income for federal income taxation purposes (except for taxes on corporations), unless the Board obtains an opinion of nationally recognized bond counsel that such compliance is not required in order for the interest to be paid on the Bonds to be so excluded. The Board makes the following specific covenants with respect to the Code:

(a) The Board shall not take or omit any action if the taking or omission would cause the Bonds to become "arbitrage bonds" under Section 148 of the Code, and shall assist in calculations necessary to determine amounts, if any, to allow the State to pay to the United States all "rebates" on "gross proceeds" of the Bonds that are required under Section 148 of the Code.

(b) Covenants of the Board or its designee in its tax certificate for the Bonds shall be enforceable to the same extent as if contained herein.

Section 5. Sale of Bonds. The State Treasurer, with the concurrence of the Vice Chancellor for Finance and Administration, shall sell the Bonds as the State Treasurer deems advantageous.

Section 6. Other Action. The State Treasurer, the Vice Chancellor for Finance and Administration, or the Controller of the Department of Higher Education, is hereby authorized, on behalf of the Board, to take any action that may be required to issue, sell, and deliver the Bonds in accordance with this Resolution.

Additional Information on Debt and Debt Service

Table C - Fall 1998 Bond Sale for Article XI-F(1) Bonds:
Magnitude of Bonds to be Sold and Associated Annual Debt Service

(dollars in millions)

Institution Article XI-F(1) Bonds Estimated Annual
Debt Service
OIT $ 0.22 $0.02
OSU 3.52 0.23
PSU 9.73 0.64
UO 8.92 0.574
Systemwide 7.73 0.61
TOTAL DEBT ASSOCIATED WITH FALL BOND SALE $30.12 $2.07

Table D - Comparison of Total Article XI-F(1) Bonded Debt Outstanding by Auxiliary Category and Repayment Sources, June 30, 1998 to Fall 1998 Bond Sale
(dollars in millions)

Auxiliary Bonds Outstanding as of 6/30/98** Annual
Debt Service as of 6/30/98**
Fall Bond Sale Increment of Bonds Outstanding Fall Bond Sale Increment of Debt
Service
Revenue Available for Debt Service Dedicated Revenue Source
Consolidated Dorms $ 39.2 $3.9 $39.2 Res & Dining Hall
Independent Dorms 7.7 0.5 3.7 0.2 (same as above) Res & Dining Hall
Parking 14.9 1.5 5.1 Parking Fees
Auxiliary Programs 109.5 7.6 22.0 1.6 33.6 Housing rental income, lease payments, user fees, transfer from E&G
Student Building Fee Program 54.8 6.7 4.4 0.3 7.2 Student Building Fees
TOTAL DEBT OUTSTANDING $226.1 $20.2 $30.1 $2.1

** Excludes OHSU debt outstanding of $44.6 million. Debt service is paid by OHSU per OUS/OHSU Debt Service Agreement.

Table E - Article XI-G Bonded Debt Historical Trends
and Projected Requirements After Fall 1998 Bond Sale
(dollars in millions)

Biennial E&G
All Sources
Debt Service
Percent of E&G Total
General Fund
E&G
Debt Service
General Fund
1991-1993 $ 818 1.55% $515 2.46%
1993-1995 866 1.47% 482 2.64%
1995-1997 980 1.67% 431 3.79%
1997-1999 1,038 1.74% 470 3.84%

E&G = Education & General

Table F - Article XI-G Bonded Debt Outstanding Actual and Projected
(dollars in millions)

Bonds
Outstanding
Annual
Debt Service
Biennial
Debt Service
1997-1998 $ 65.1 $8.5 $18.1
1998-1999 73.6 9.6
1999-2000 75.0 9.4 17.3
2000-2001 68.9 7.9
2001-2002 63.8 8.0 16.0
2002-2003 58.7 8.0
2003-2004 53.9 8.0 14.2
2004-2005 50.2 6.2


RESOLUTION FOR THE BOND REFUNDING SALE OF ARTICLE XI-G AND ARTICLE XI-F(1) BONDS

Staff Report to the Board

The Board of Higher Education has an opportunity to achieve significant debt savings by refunding certain outstanding series of bonds. This will require the issuance of refunding bonds. Authorization for the sale is granted by Oregon Revised Statues 286.051 and 288.605 through 288.695.

Based on advice to the Controller's office by the OUS bond underwriters, there is a potential to save about four percent on the debt service projected for certain maturities sold in previous bond sales. The Controller's office is recommending the refunding of approximately $32 million of long-term bonds, from the 1996 Series A and 1996 Series C bond sale. This amount is below the approximately $56 million sold in that sale, the majority of the remainder being for short-term ORRBAC bonds (Oregon Baccalaureate bonds sold in small amounts to small investors, normally for the purpose of financing college tuition). Given current market conditions, the refunding is expected to more than meet the criteria of achieving at least a three percent savings; a savings of approximately $1.4 million has been projected by the underwriters.

Staff Recommendation to the Executive Committee

Staff recommended that the Executive Committee adopt the following bond Resolution authorizing the issuance of refunding bonds.

Executive Committee Discussion and Action (September 18, 1998)

Following a review of the Resolution, Ms. Wustenberg asked if the existing bonds would be called. Ms. Lanier said that her understanding of the process was that the bonds are callable.

Dr. Aschkenasy moved and Ms. Wustenberg seconded the motion to approved the Resolution as submitted. The following voted in favor: Directors Aschkenasy, Christopher, McAllister, Wustenberg, and Imeson. Those voting no: none.

NOTE: Subsequent consultation with the Controller provided clarification on the processes followed when bonds are immediately callable (i.e., are on a fixed call schedule). In the second circumstance, proceeds from the sale of the new bonds will be placed in an irrevocable trust, to provide for all future debt service payments of the old bond series. The proceeds of the 1998D and E refunding sale will be used to refund part of the 1996A and C sale.

In addition, the proceeds in the trust will be used to purchase investments which, together with the earnings on those investments, will be sufficient to make all interest payments on the old 1996A and C bonds when they come due, as well as to pay principal and any premiums on the dates fixed for redemption. The proceeds from the 1998D and E sale and investment earnings will be held in trust for the benefit of the owners of the 1996A and C bonds being refunded.

Bonds with a call date may be redeemed before their stated maturity date. Typically, there is a set amount that may be called each year until the bonds mature. This schedule of redemption is included in the Official Statement at the time the bonds are sold. For example, the 1996C bonds with a maturity date of August 1, 2026 have the call dates beginning in August 2017 through 2026.

BOARD ACTION:

RESOLUTION FOR THE SALE OF REFUNDING BONDS

WHEREAS, ORS 286.031 states, in part, that the State Treasurer shall issue all general obligation bonds of this state after consultation with the state agency responsible for administering the bonds proceeds; and

WHEREAS, ORS 286.033 states, in part, that the state agency shall authorize issuance of bonds subject to ORS 286.031 by resolution; and

WHEREAS, ORS Chapters 351, 288, and 286 provide further direction as to how bonds are sold and proceeds administered; and

WHEREAS, ORS Chapter 286.051 authorizes the issuance of refunding bonds and ORS 288.605 et. seq. authorizes the issuance of advance refunding bonds by the State Treasurer upon finding that certain requirements and conditions have been met; and

WHEREAS, it appears advantageous to this Board to sell refunding bonds to refund certain outstanding bonds thereby benefitting the state;

NOW, THEREFORE, be it resolved by the Board of Higher Education of the State of Oregon as follows:

Section 1. Issue. The State of Oregon is authorized to issue general obligation bonds (the "Bonds") in such series and principal amounts as the State Treasurer, after consultation with the Vice Chancellor for Finance and Administration of the Department of Higher Education, shall determine are required to refund all or any portion of its General Obligation Building Bonds, 1996 Series A; 1996 Series C; and any other series of bonds that meet the requirements established by law and approved by the State Treasurer.

Section 2. Maintenance of Tax-Exempt Status. The Board covenants for the benefit of the owners of the Bonds to comply with all provisions of the Internal Revenue Code of 1986, as amended (the "Code"), that are required for Bond interest to be excluded from gross income for federal income taxation purposes (except for taxes on corporations), unless the Board obtains an opinion of nationally recognized bond counsel that such compliance is not required in order for the interest to be paid on the Bonds to be so excluded. The Board makes the following specific covenants with respect to the Code:

(a) The Board shall not take or omit any action if the taking or omission would cause the Bonds to become "arbitrage bonds" under Section 148 of the Code and shall assist in calculations necessary to determine amounts, if any, to allow the State to pay to the United States all "rebates" on "gross proceeds" of the Bonds that are required under Section 148 of the Code.

(b) Covenants of the Board or its designee in its tax certificate for the Bonds shall be enforceable to the same extent as if contained herein.

Section 3. Sale of Bonds. The State Treasurer, with the concurrence of the Vice Chancellor for Finance and Administration, shall sell the Bonds as the State Treasurer deems advantageous.

Section 4. Other Action. The State Treasurer, the Vice Chancellor for Finance and Administration, or the Controller of the Department of Higher Education, is hereby authorized, on behalf of the Board, to take any action that may be required to issue, sell, and deliver the Bonds in accordance with this Resolution.

OAR 580-001-0000, APPEARANCES BEFORE THE BOARD-TEMPORARY RULE

Summary

At its July 1998 meeting, the Board of Higher Education approved a new Board meeting format, which included a 30-minute public input session. An amendment is necessary to Oregon Administrative Rule 580-001-0000, Appearances Before the Board, before the new process of receiving public comment can be initiated.

In order for the Board to receive public comment at the December 18, 1998 meeting, a Temporary Rule must be filed with the Secretary of State's Office. A Permanent Rule will be prepared for a vote by the Board at the December meeting.

As part of the process, legal counsel suggested that Bylaws pertaining to the Board's Order of Business be amended as well to better reflect the modified agenda. Greater specificity regarding the meetings will be written into the Bylaws, as opposed to the Rule, thereby allowing for more expeditious change in the future, as the Board deems necessary.

The revised Rule is submitted as follows (italicized text denotes deletions; bracketed text denotes additions):

Appearances Before the Board
580-001-0000 Individuals and representatives of organizations desiring to appear before the Board to present any matter concerning higher education [may do so]. shall file a written request stating the purpose of the appearance and naming explicitly the person or persons who desire to speak to the Board. [The Board may establish procedures for public input at Board meetings in its Bylaws.] The written request shall be delivered to the Board Secretary at least seven days before the meeting at which the matter is proposed to be heard. If the request is granted by the Board President, conditions of the appearance may be imposed. If written materials are to be submitted for Board consideration, 25 copies thereof shall be furnished for consideration by the Board.

Staff Recommendation to the Board

Staff recommends that the Board approve the Temporary Rule, OAR 580-001-0000, Appearances Before the Board. Staff will submit a Permanent Rule and Bylaw amendments at the December 1998 Board meeting.

BOARD ACTION:

B.MUS. IN CONTEMPORARY MUSIC, WOU

Introduction

Western Oregon University requests authorization to offer a Bachelor of Music (B.Mus.) degree in Contemporary Music. The Board reviewed a preproposal for this program at its May 15, 1998, meeting.

The program will be phased in starting with the 1998-99 academic year, to be fully operational by the year 2000. Western's music department currently serves 40 majors in the B.A./B.S. programs. The proposed degree would draw some of those majors and may also attract other students who might have elected a different major or institution. Within the first five years of implementation, graduation rates are expected to reach approximately 8 to 12 per year.

No other OUS institution offers a B.Mus. in contemporary music. Specific components of the proposed degree are offered as separate programs (e.g., jazz studies); however, Western will offer the only degree program that blends these musical disciplines into a single, cohesive baccalaureate degree.

Staff Analysis

1. Relationship to Mission

Western's mission calls for providing liberal arts programs, including program offerings in the creative arts, as well as "responding to the challenges Oregonians face in career changes...and adapting to new technologies." The proposed program is particularly relevant given the changing nature of music and the impact that technology has had on the music industry.

2. Evidence of Need

The nature of "making music" has changed dramatically in the last 50 years. Mass distribution and broadcasting, electronic music, film and video scoring, field recording, and personal computers have all influenced this change. The roles of performer and composer have blurred, as have the musical styles of classical, jazz, and commercial music. The proposed degree is a response to this new reality. Skills and knowledge that are typical components within tracks in a traditional major are integrated in such a way that students will be prepared to participate in the generation and production of music in the new context.

As music production becomes more accessible to musicians of modest means, the music industry will become less focused in traditional metropolitan centers such as Los Angeles. The music market is expanding concurrently with the growth in high-tech industries, creating more opportunities for musicians at the leading edge of creativity and entrepreneurship. Students completing this program may find employment in a variety of music-making areas such as composition of commercial music; music for films, TV, or dramatic productions; jazz performance; studio musicians; work in post-production houses or recording studios; studio teaching in composition; and music software consulting.

3. Quality of Proposed Program

Utilizing the current core required of music majors, the proposed program will provide students with a broad foundation of applied and theoretical studies in music, with an emphasis on music since 1950. The program is designed to prepare students to either enter the professional marketplace in any number of capacities or to proceed to graduate study. To that end, Western has consulted with the University of Oregon's music program. (Since four of WOU's music faculty have earned their graduate degrees from UO, they are especially well-versed with the requirements of that school and will be able to prepare students for that eventual transition.)

Five new courses will be developed for this program: Introduction to Ethnomusicology; Jazz Styles and Analysis; Music Since 1950; The Business of Music; and Senior Seminar and Project. The new courses are logical extensions of elective areas currently in place and will utilize strengths of current and newly hired faculty. The Senior Project will be a capstone experience such as a public performance or presentation of original music and will serve as concrete documentation of each student's competency in performance, composition, and MIDI technology.

4. Adequacy of Resources to Offer the Program

Current resources are adequate to offer this program, and only minor additional costs (for services/supplies and library resources) are anticipated at this time. As noted earlier, technology is integrated into the coursework throughout this curriculum. Some of Western's facilities that support that feature include:

According to a reviewer from the Department of Recording Industry, Middle Tennessee State University, "the hardware and accompanying software currently in place . . . will provide excellent educational opportunities for students. . . . The facilities will give alumni of the program the necessary conceptual and practical foundation necessary to be successful in the pursuit of a career in contemporary and commercial music."

Financial resources for maintenance, replacement, and acquisition of new equipment are maintained through modest lab and computer usage fees.

Program Review

The proposed program has been reviewed positively by all appropriate institutional committees and the Academic Council.

Staff Recommendation to the Board

Staff recommends that the Board authorize Western Oregon University to establish a program leading to the Bachelor of Music in Contemporary Music, effective fall 1998, with a follow-up review of the program to be conducted by the OUS Office of Academic Affairs in the 2003-04 academic year.

BOARD ACTION:

CLEAN COPY, INC. LEASE AGREEMENT, PSU

Summary

As part of the PSU Urban Center, Phase I project, the building and site housing the Clean Copy, Inc. business was condemned by Tri-Met. Terms of the "friendly condemnation" by Tri-Met included PSU assisting Clean Copy, Inc., to obtain another site on or near the PSU campus. A lease has been negotiated that would provide Clean Copy, Inc. with renovated space in the PSU Parking Structure II. In September 1998, the Executive Committee of the Board approved the sale of $6.09 million of Article XI-F(1) Bonds for the Urban Center, Phase I project, of which $750,000 was associated with creating space for this tenant. The debt service on the $750,000 portion of the bonds would be paid from rental income derived from the Clean Copy, Inc. lease. The term of the lease is for ten years with options to extend. In accordance with ORS 351.150 and 351.060 and OAR 580-050-0005, the lease is submitted for the Board's review and approval.

Staff Report to the Board

PSU requests authorization to lease approximately 4,400 square feet of space to be renovated for the lessee in its Parking Structure II, at the corner of Broadway and Mill Street. The lessee will be Clean Copy, Inc., which has provided copying and course packet/copyright clearance services for the University since 1979, with approximately two-thirds of their business related to the University or its students. Clean Copy, Inc. has been located on the site of the PSU Urban Center, Phase I, now under construction. Their building, which was not owned by PSU at the inception of the Urban Center, Phase I project, was condemned by Tri-Met as part of that project. Terms of this "friendly condemnation" stipulated that PSU assist Clean Copy, Inc. in obtaining an alternate location within the University District and, in return for this and other considerations pertaining to the transit mall improvement project, Tri-Met would convey the property to PSU.

Funding for the Clean Copy, Inc. relocation, as well as the construction cost of new facilities, was included in the revised total funding for the Urban Center, Phase I project that was approved at the February 20, 1998 Board meeting. The Legislative Emergency Board subsequently approved the revised expenditure limitation of $33.2 million for the project on April 10, 1998. As part of the Urban Center, Phase I project funding, the Board approved the issuance of $6.09 million in Article XI-F(1) bonds, of which $750,000 was to be attributable to the relocation of Clean Copy, Inc., with the source of debt repayment on the $750,000 portion to come from this lease. These bonds are scheduled to be sold as part of the fall 1998 bond sale.

PSU, working with Clean Copy, Inc., has retained the services of Soderstrom Architects to design new facilities for Clean Copy, Inc., to be located in space renovated on the ground floor of Parking Structure II. Bids for the construction of this facility were opened on September 10, 1998, and Shimizu Construction (the same contractor being used for the Urban Center construction) was selected as the lowest cost responsive bidder. Construction is scheduled to begin in late September or early October 1998 and should reach completion in time to allow Clean Copy, Inc., to occupy the premises by December 1998.

Lease Provisions. The initial lease term will be ten years, with an option to renew for four successive terms of five years each, for a total term, including extensions, of 30 years. The tenant will be responsible for its pro rata share of all operating expenses of the Parking Structure, all property taxes and assessments of any public authority against the Parking Structure, and its share of all insurance relating to the Parking Structure. The lease cost incorporates the revenue lost to PSU due to the loss of parking spaces. The tenant will also pay for up to eight parking spaces for its use at the standard rate charged by the University. Throughout the term of this lease, the tenant will be responsible for all charges for services and utilities incurred in connection with the tenant's use, occupancy, operation, and maintenance of the premises. The lease has been written and approved by the Attorney General's Office.

Staff Recommendation to the Board

Staff recommends that the Board approve the request by PSU for authority to lease space in Parking Structure II to the Clean Copy, Inc., by authorizing the Board President and Secretary to execute said lease on behalf of the Board.

BOARD ACTION:

PSU BOOKSTORE LEASE AGREEMENT, PSU

Summary

As part of the PSU Urban Center, Phase I project, the City of Portland requires that retail space at the ground level be incorporated in the building plans. A lease to the PSU Bookstore has been negotiated that would meet this requirement and provide expanded space for the Bookstore in the East Wing of the new Urban Center. In September 1998, the Executive Committee of the Board approved the sale of $6.09 million of Article XI-F(1) Bonds for the Urban Center, Phase I project of which $4 million was associated with creating space for the PSU Bookstore. The bond debt service for the $4 million portion would be repaid from rental income from the Bookstore. The term of the lease is for 30 years, with one option for the Bookstore to terminate at the end of 15 years upon payment of a fee. In accordance with ORS 351.150 and 351.060 and OAR 580-050-0005, the lease is submitted for the Board's review and approval.

Staff Report to the Board

PSU requests Board approval to lease approximately 23,000 square feet of space on the first floor level of the East Wing building of the Urban Center, Phase I project to the PSU Bookstore. The term of the lease would be for a period of 30 years with an option to terminate after 15 years, under certain conditions. The PSU Bookstore is a vital service element of the University and is in need of expansion space not available at its current location. In addition, this new, larger retail store will front the busiest bus stop in Portland, and with the prospect of fronting on the new Tri-Met South-North Light Rail line, should have excellent retail potential.

The Board approved final, revised funding for the Urban Center, Phase I project at its February 20, 1998 meeting. The Legislative Emergency Board subsequently approved the revised total project expenditure limitation of $33.27 million on April 10, 1998. As part of the project funding, the Executive Committee of the Board recently approved the issuance of $6.09 million in Article XI-F(1) bonds, of which $4.0 million will be attributable to the Bookstore space with the source of debt repayment to come from this lease. These bonds are scheduled to be sold as part of the fall 1998 bond sale.

PSU has retained the services of Thomas Hacker and Associates to design the Urban Center, Phase I, including all retail areas on the first floor. The shell for the PSU Bookstore is estimated to cost $2.0 million and tenant improvements are estimated at another $2.1 million. Construction of the Urban Center, Phase I project should be complete in the fall 1999/winter 2000 timeframe.

Lease Provisions. The initial term of the lease is 30 years; however, the Bookstore will have the option to terminate this arrangement after 15 years subject to the payment of an early termination fee equal to six months' rent. The Bookstore will also have the option to extend the lease for two successive terms of five years. Rent for this space is based on the estimated costs of design and construction (including tenant improvements), plus bond interest and issuance costs, amortized over 30 years. In addition, the tenant will be responsible for its pro rata share of all operating expenses, including all charges for services and utilities of the facility, all property taxes and assessments of any public authority against the facility, and its share of all insurance relating to the facility. The lease has been written and approved by the Attorney General's Office.

Staff Recommendation to the Board

Staff recommends that the Board approve the request by PSU for authority to lease space in the East Wing of the Urban Center building to the PSU Bookstore by authorizing the Board President and Secretary to execute said lease, subject to minor changes approved by the Attorney General's Office, on behalf of the Board.

BOARD ACTION:

COLEMAN FIELD RENOVATION, ADDITIONAL EXPENDITURE LIMITATION, OSU

Staff Report to the Board

Oregon State University received approval from the Board at its January 1998 meeting, and subsequent approval from the Legislative Emergency Board at its June 1998 meeting, for a $2,200,000 Other Funds-funded project to repair, renovate, and remodel the Coleman Field Baseball Facility. The project provides a completely renovated baseball park, new storage facilities for the men's baseball program, new seating, press box, and team dugouts. Code and handicapped access requirements are being met, and the brick exterior is being added to the face of the park, to link the facility architecturally to existing buildings.

Fundraising for the project continued during the summer, and additional restricted gifts and pledges were received, sufficient to provide an additional $300,000 to the project budget beyond existing limitation approval. During this same period, the construction bidding process was completed; upon opening, the bids were higher than expected, and would have required some portions of the project to be deleted. With the receipt of the additional gifts, the Athletics Department now has sufficient gift funds restricted to this project to permit the full project as previously approved by the Emergency Board to proceed. In order to be able to augment the project budget, an expenditure limitation increase will be required from the Emergency Board.

Staff Recommendation to the Board

Staff recommends that the Board approve the Oregon State University Coleman Field Renovation Project, with a revised total project cost of $2.5 million and authorize the Vice Chancellor for Finance and Administration to seek authorization from the State Emergency Board for an increase in the total project expenditure limitation to $2.5 million of Other Funds.

BOARD ACTION:

FOURTH QUARTER REPORT ON INVESTMENTS

Staff Report to the Board

The fourth quarter investment report of the Pooled Endowment Fund of the Oregon University System for the period April 1 through June 30, 1998, prepared by R. V. Kuhns and Associates, investment consultants, is included in the supplemental materials (on file in the Board's office).

(No Board Action Required)

ANNUAL REPORT ON INVESTMENTS

Staff Report to the Board

A comprehensive report on the Oregon University System's entire investment portfolio, consisting of endowment funds (both pooled and separately invested), donation funds, and plant funds, is incorporated in the System's Investment Report, which is included with the supplemental materials.

The annual report on the System's pooled endowment funds is presented in three parts: (1) a brief narrative that delineates the annual performance results of our investments at the Common Fund, (2) a table comparing investment performance for the fiscal year ending June 30, 1998, to prior periods and to related benchmarks, and (3) a fourth quarter investment consultant's report from R.V. Kuhns and Associates, which is included with the supplemental materials. (Copies of the supplemental materials are available from the Office of Finance and Administration.)

The June 30, 1998, market value and asset allocation of the System's pooled endowment fund investments are summarized as follows:

Pooled Endowment Fund Investments

Fund Title

Market Value
06-30-98

% of
Total

Multi-Strategy Bond Fund $13,284,516 23.1%
Multi-Strategy Equity Fund 37,804,188 65.6%
Real Estate Investment Trust 1,973,275 3.4%
Endowment Energy Partners 77,027 .1%
Endowment Partners Fund 248,823 .4%
Endowment Venture Partners 489,330 .9%
TOTAL Common Fund Investments 53,877,159 93.5%
Cash Invested in State Treasury's Short-Term Investment Pool
3,746,156

6.5%
TOTAL Pooled Endowment Funds 57,623,315 100.0%

Common Fund Summary

Multi-Strategy Bond Fund (6/30/98 market value $13.3 million, 23.1 percent of total). The Multi-Strategy Bond Fund is a "Fund of Funds," which means that it is a fund made up of allocations to other fixed income funds of the Common Fund. These funds include the High Quality Bond Fund, the Global Bond Fund and the International Bond Fund.

The Multi-Strategy Bond Fund continued its strong performance with return of 2.5 percent for the fourth quarter, up from 1.9 percent at the end of the third quarter. The rate of return for the year ending June 30, 1998, is 11.6 percent. The Multi-Strategy Bond Fund outperformed its benchmark, the Lehman Aggregate Bond Index, of 10.5 percent.

During the third quarter, the Multi-Strategy Bond Fund was helped by its 55 percent High Quality Bond Fund allocation, as well as its exposure to private debt strategies. Detracting from return, however, was the fund's 25 percent allocation to the Global Bond Fund, which reduced performance as foreign bond markets generally underperformed the U.S. The five percent allocation to high yield also lessened returns as corporate spreads widened due to concern that a failing yen and a renewed round of Asian devaluations would have a negative impact on corporate earnings.

Multi-Strategy Equity Fund (6/30/98 market value $37.8 million, 65.6 percent of total). The Multi-Strategy Equity Fund is also a "Fund of Funds," as described above. The funds included are the Core, Growth, Small Cap Growth, Small Cap Value, Equity-Income, Absolute Return, Hedge and International Funds.

The Multi-Strategy Equity Fund returned 1.0 percent for the quarter, but trailed its benchmark's return of 1.8 percent and the even stronger 3.3 percent return of the S&P 500 Index. For the fiscal year, the fund has a rate of return of 25.4 percent, compared with 22.7 percent for its benchmark and 30.2 percent for the S&P 500. Strategy allocations adding value over the S&P 500 for the quarter included the Growth, Hedge and Absolute Return (Equitized) Funds, while allocations to Core, Equity-Income and International/Global reduced performance.

Endowment Realty Investors I (6/30/98 market value of $2.0 million 3.4 percent of total). Through March 31, 1998, Endowment Realty Investors' I (ERI I) total return since inception stood at 6.07 percent, slightly ahead of the 5.04 percent total return for the benchmark, National Council of Real Estate Investment Fiduciaries (NCREIF) Index, over the same period.

The fund returned 11.49 percent for the past four quarters compared to the benchmark return of 15.22 percent. Total liquidation of the fund is scheduled for December 31, 2000.

Endowment Energy Partners Fund I (6/30/98 market value $77,027, 0.1 percent of total). Endowment Energy Partners I (EEP I) has produced a net internal rate of return of 9.6 percent since its inception in 1989 through March 31, 1998. EEP I completed its five-year investment phase on December 31, 1994, and is now over half way through its liquidation phase.

Endowment Partners Fund I (6/30/98 market value $248,823, 0.4 percent of total). Endowment Partners Fund I (EPF I) has returned an aggregated net internal rate of return of 11.2 percent since its inception in 1988 through March 31, 1998. This return is lower than the benchmark of 12.4 percent.

Endowment Venture Partners I (6/30/98 $489,330, 0.9 percent of total): The net internal rate of return on capital received from Endowment Venture Partners I (EVP I) participants since inception in 1990 through June 30, 1998, stood at 23.5 percent as compared to the benchmark of 17.8 percent.

The following table summarizes the investment performance results for the fiscal year ending June 30, 1998, for the OUS Pooled Endowment Fund.

(No Board Action Required)

Oregon University System

POOLED ENDOWMENT FUNDS
PERFORMANCE COMPARISON
(Based on Total Return)

Annual Performance
93-94 94-95 95-96 96-97 97-98
Total Endowments
OUS Total Endowment 2.8% 15.8% 16.4% 18.9% 21.6%
NACUBO, Pools $25M to $100M 2.4% 15.8% 16.7% 20.1% ----
Equity (Stock) Investments
OUS Equity Fund 3.4% 17.6% 23.5% 25.4% 25.0%
S&P 500 Stock Index 1.4% 26.0% 26.1% 34.7% 30.2%
Oregon Equity Fund 1.6% 22.2% 26.0% 28.8% 25.4%
Fixed (Bond) Investments
OUS Bond Fund 1.6% 13.7% 6.3% 10.0% 11.3%
Lehman Aggregate Bond Index -1.5% 12.5% 5.0% 8.2% 10.5%
Other Investments
Real Estate Investment Trust -0.5% 8.5% 8.8% 8.5% 13.1%
Endowment Energy Partners 23.0% 33.0% 1.5% 0.5% -39.5%
Endowment Partners Fund 16.3% 9.2% 4.9% 11.3% 19.4%
Endowment Venture Partners 2.0% 40.4% 53.2% 12.6% 23.9%
OUS-Stocks/Bonds combined 2.7% 16.3% 18.5% 21.4% 21.4%
Weighted Target Index 0.2% 20.6% 17.7% 26.8% 23.3%
65% S&P 500 Stock Index
35% Lehman Aggregate Bond Index

SEMI-ANNUAL AUDIT REPORT

Staff Report to the Board

The Internal Audit Division's (IAD) Semi-Annual Audit Report January-June 1998, included in the supplemental materials (on file in the Board's office), summarizes audit results from projects completed over the past six months and provides an update on the status of IAD's 1997-98 Audit Plan. As part of the risk assessment program identified in the 1997-98 Audit Plan, departmental audits were completed at five OUS institutions. These audits focused on the business and administrative functions normally performed by campus departments. IAD dedicated significant consulting resources to provide support and information to the Board in three critical areas: 1) the development of OUS's biennial budget for submission to the Governor, 2) the remodel of the OUS budget system for allocating education and general funds to the institutions, and 3) the collection and analysis of pertinent information related to intercollegiate athletics.

(No Board Action Required)

1998-99 INTERNAL AUDIT PLAN

Staff Report to the Board

The Internal Audit Division (IAD) presents its audit plan for the 1998-99 fiscal year, which is included in the supplemental materials (on file in the Board's office). This plan incorporates selected best audit practices endorsed by the Institute of Internal Auditors, the American Institute of Certified Public Accountants, and other professional audit organizations. These practices have been integrated by IAD into three core programs designed to help address OUS's audit-related needs for the upcoming year: (1) the 1998-99 Risk Assessment Audit Program, which includes departmental audits of critical business functions, information technology audit plans, and contracting authority audits; (2) the Consulting Services Program, which includes provisions for consulting on both campus and Systemwide issues; and (3) the Control Assessment and Training Program, which makes available combined risk assessment and internal control training sessions to campus departments. In addition to these programs, the plan provides for such other projects and services as campus request audits, audit follow-ups, outsourcing, fraud audits, and liaison for Federal, Oregon Audits Division, and other external audits and reviews.

(No Board Action Required)

COMPENSATION FOR THE CHANCELLOR AND INSTITUTION PRESIDENTS

Background

Faculty and staff salaries throughout the OUS have been adjusted for 1998-99 in accordance with the Board's salary policy. The report of the Chancellor regarding 1998-99 salaries on July 16, 1998 for institution presidents, and the Board approval of the 1998-99 salary for the Chancellor, completed the process of salary adjustments.

The Board met with the Chancellor to discuss recommendations for institution presidents and the Chancellor. The Board is in agreement that Chancellor Cox and the seven presidents have performed above and beyond expectations and at high-levels of excellence, and deserve merit increases. The increase for the Chancellor and presidents will be a three percent increase effective September 1, 1998 with an additional three percent increase on February 1, 1999.

Report of Action Taken

IMD 1.020 (1) provides that the Chancellor recommend to the Board salary adjustments for the institution presidents. The Chancellor's recommendation is found on the following schedule.

ORS 351.075 (3) stipulates that the Board of Higher Education shall fix the compensation of the Chancellor.

The President of the Board recommended on July 16, 1998 that the September 1, 1998 compensation for the Chancellor be increased by three percent and on February 1, 1999, an additional three percent increase shall become effective. The increases are reflected on the following schedule.

(No Board Action Required)

Compensation Schedule
Title/Institution POSITION Annual Rate as of 9/1/98 Annual Rate as of 2/1/99
Chancellor Joseph Cox

Salary

Expenses

Housing Allowance



$137,678

$ 16,188

$ 13,848



$141,808

no change

no change

Presidents
UO David Frohnmayer

Salary

Expenses



$133,908

$ 15,000



$137,925

no change

OSU Paul Risser

Salary

Expenses



$133,908

$ 15,000



$137,925

no change

PSU Daniel Bernstine

Salary

Expenses



$133,908

$ 15,000



$137,925

no change

WOU Betty Youngblood

Salary

Expenses



$107,124

$ 10,000



$110,338

no change

SOU Stephen Reno

Salary

Expenses



$107,124

$ 10,000



$110,338

no change

EOU Phillip Creighton

Salary

Expenses



$107,124

$ 10,000



$110,338

no change

OIT Martha Anne Dow

Salary

Expenses



$107,124

$ 10,000



$110,338

no change