APPROVED

IHETS Management Committee
(meeting jointly with Integrated Technologies Committee
and the Indiana Partnership for Statewide Education)
April 18, 2002 - 1:00 pm
IHETS Board Room

PRESENT
Michael Baumgartner, Commission for Higher Education
John Beeson, Indiana University
Wayne Bohm, University of Southern Indiana
Byron Bond, Indiana State University
Karen Bonnell, University of Southern Indiana
Joetta Burrous, Purdue University
John Burton, Ball State University
Greg Fawcett, Independent Colleges of Indiana
Michael Gay, Purdue University
Vernon Houchins, Vincennes University
Edyth Huffman, Indiana State Library
Robert Jefferson, Indiana State University
Lou Jensen, Indiana State University
William Kramer, Ivy Tech State College
Abu Moniruzzaman, Ivy Tech State College
Fred Nay, Ball State University
Robert Ruble, University of Southern Indiana
Frank Sabatine, Ball State University
Jerry Shehan, Purdue University
Patrick Smoker, Purdue University
Randy Spears, Purdue University
Richard Tully, Ivy Tech State College
Brian Voss, Indiana University


IHETS STAFF
Dave King
Ed Tully
Susan Scott
Tim Fisher
Ed Stockey
Julie Wheeler
Carol Brunty

Chairman Kramer called the meeting to order at 1:05pm

King opened the meeting by giving background stating that at the beginning of our biennial budget over a year ago, we received a 1% reduction in overall legislative appropriation each year of the biennium. Because of the revenue reduction and that cut, we presented a budget on March 15 for FY 0203 that showed approximately $500k reduction in operating expenses. Then on April 1 the IU fiscal office, as part of the Governor’s Deficit Management Program, told IHETS to reduce the FY 02-03 budget by an additional 7% or 501k.

In addition, we were notified that we would be liable for an immediate 1/12 (8%) reduction, approximately $600k, as our June appropriation payment for this fiscal year would be deferred until 2004. King has had several conversations with Steve Keucher in IU fiscal office to obtain clarification about the situation. Keucher said, “The deferral will be handled as an accounts receivable. This will enable us (IU) to stay solvent (the income is recognized but instead of receiving cash we receive a promise to pay in the future). If it turns out later on that the state decides it cannot make good on its promise to pay, we will have to write off the receivable and take a hit to fund balance, a hole we'd then have to dig out of through paying ourselves back through savings from reduced expenditures.”

King noted that staff agrees it is important to actively identify reallocation and reduction that will position the organization for sustainability and growth, rather than cut back to where the organization was 5 years ago. Therefore, staff is focusing on the IHETS mission and have placed a higher priority on projects and initiatives that help decrease our reliance on appropriated funds and move to create greater balance with grant funds and other revenue sources, such as user fees.

King stated that we are sequestering or reallocating funds and other resources internally to maintain some priority programs which provide opportunities for additional funds outside of legislative appropriations.
One area is the existing budget line ($1.14M) that is used to provide support to member institutions with connections and service from the Indiana Telecommunication Network. He added that the overall network operation will likely be stressed in the coming year as the institutions take cuts and will need to decide whether to keep their circuits.

Nay stated that since IHETS placed quality of service on the network, it is a resource that Ball State would not want to do without and if there were a cut in subsidy they would not reduce circuits. He stated that if a cut were evenly disbursed across the board, Ball State would support it.

King added that IHETS is very heavily reliant on appropriated funds for the IHETS side of the operating budget that when something like this happens there is very little existing flexibility to work from. Because of that we are continuing to identify ways to support projects such as the Lifelong Learning Service. In collaboration with eight of the nine Indiana public television stations, a grant proposal was just submitted to the Corporation for Public Broadcasting totaling $1.1M. If funded, service will start January 2003 and provide IHETS members an opportunity to bring classes directly into people’s homes.

King added that we are also maintaining support for the Indiana Learning Portal Project. The Lilly Endowment has committed $140k for the startup phase of this collaborative project. IHETS is participating with the State Library, Indiana Humanities Council, Vision Athena, public broadcasting stations, the Indiana Web Academy and others. The overall grant potential is in the multiple millions.

With that background given, King proceeded to outline the proposed reductions for FY 02-03.

Equipment – approximately $70k reduction

Audio Conference Bridge Service
We will eliminate the budgeted upgrade of the audio conference bridge and manage a fee for service bridging system through the state’s contract with Quest. The user fee for audio bridging will now be $.05/minute per port. A subscription level of service for a monthly fee is being considered. The system is web-based and users will still call IHETS to schedule conferences.

IP Video Bridging Service
The bridge is currently being installed. It will be in test phase beginning in May and operational in the fall. When operational, there will be a nominal fee for use of the IP Video Bridge for Higher Education members. There will be a higher (or non-discounted) fee for all non-higher ed users. Staff is working with the IP Video Task Force to identify the fee scale.

Computer Equipment
We are moving to a four-year rollover (from three) for staff desktop computers, and reduce overall expenditures on computer hardware for this coming fiscal year to situations of documented significant need. King added that we hope to reestablish the three-year plan eventually.

NOC S&E - $20k
SysIn S&E - $35k

Training
We will shift some training development from outside sources to internal training. We will use outside training courses for “train-the-trainer” opportunities and then conduct major training sessions for technical staff internally.

Nay suggested that we might consider inviting the institutions to attend the “train-the-trainer” sessions (i.e.: Cisco training) and charge them a fraction of what they would need to pay to get the same training on the outside. It would also serve as a way for technical personnel to work together.

Printing - $75k

Schedule of Classes
Staff has been in transition with the Indiana College Network schedule of classes, moving it from a printed document distributed by mail, to an on-line dynamic HTML document. The goal was to reduce printing and postage expense over time and create more timely access. We are escalating the transition and will move the schedule of classes on-line immediately. We are retaining funds for print on-demand and other marketing tools.

MERLOT (pending) - $25k

Shared with CHE
MERLOT is a national project developing faculty peer review processes and standards for learning modules. There are approximately seven Indiana faculty members participating in the leadership of this effort. Initially the membership and travel expenses for Indiana and our faculty participants had been split with the Commission for Higher Education. Membership for FY02-03 will be maintained, however, continued support is questionable for the following fiscal year. One option will be to request that the Commission reestablish support for a portion of the expense.

Sabatine stated that if we are unable to identify funding, he recommended terminating the MERLOT project contract after FY 02-03. He added that institutions are responsible for the peer review travel expenses and that Ball State does not have that in the budget.

King noted that if we are out a year or two, we might still be able to reestablish a contract with MERLOT at a later time.

ICPAC SSC - $45k

Contract Reduction
Following negotiations, the contract with ICPAC for the ICN Student Services Center is reduced from $195k to $150k per year.

The $150k figure is what staff agreed it would cost to run the SSC from IHETS instead of ICPAC. We already have a help desk function that is being funded by ITN. Staff could be added to accommodate the additional responsibilities and bring Sue Allmon to IHETS from ICPAC. King noted that ICPAC has given us excellent service and this in no way reflects any dissatisfaction with the service they have given us.

Scott addressed a question about what services are provided by the Student Services Center. Currently, SSC operates the “800” hotline for referrals and to assist individuals that have come to our web site and can then call the hotline for follow up. They have also been doing a lot of mailing of catalogs, which will be eliminated. In addition, they provide support functions for exchanging registration information for cross-institutional registrations. The Coordinators find this to be a valuable service. They also keep records and report semi-annually to the IPSE Group in terms of where calls are coming from around the state and what subjects are asked about providing baseline market research information.

Sabatine questioned whether institutions are benefiting in terms of enrollments from this service. He indicated the Ball State is not benefiting substantially. Scott responded that one of the services that they have provided is more like a marketing service. They have done a variety of mailings and press releases. She said that over the past year there have been discussions of taking this function back in house. Also we expect through new web tracking software to be able to do a better job of seeing what is happening, and if we see that enrollments are not being generated then we will need to look at the structure.

Sabatine added that Ball State spends a lot of money on marketing and wonders if there is a duplication of state resources and is wondering of the other institutions are in the same situation.

Burrous reported that Purdue does not do any extensive marketing of it other than making sure their advisors have the booklet. She said that for fall and spring, they served over 300 students each of those semesters and 287 for summer. She said that Purdue gets a great deal of value from the service, and that a center such as ICN is valuable to the coordinators providing structure, leadership and direction.

Personnel - $111k

Position Elimination/Contract Reduction
After considerable internal discussion it was decided that the vacant mid-level management position responsible for customer relations will be eliminated and the responsibilities will be split between two existing staff members. This also includes a portion of the S&E associated with that position. In addition, personnel expenses (contract) for project management will be reduced.

King reported that David Cory will oversee the Help Desk and repair group and Regina Mack will manage the Video Network Operations Center. He added that they are both committed to customer satisfaction and he is confident that they will cover all responsibilities of this position.

Satellite Channel (payment) - $190k

Satellite User Fee
King stated first that there is no reduction in satellite channel availability planned. However, beginning FY 02-03, appropriated funds will not be used to pay for one of the four satellite channels ($190k/year). We plan to initiate a fee for satellite service of $25/hour beginning July 1, 2003. This will provide one year for members to adjust budgets and appropriation requests as needed to cover this new expense. The $25/hour fee is high end and could possibly be reduced based on the satellite schedule. When the scheduling group meets in December, the fee will be reevaluated.

To cover the satellite expense for FY 02-03, release of funds for the FY 02-03 learning module development grant program, will be deferred until July 1, 2003. The $250k grant program funds available in FY 02-03 will cover the $190k required for the satellite channel, as noted above, until the user fee begins.

Nay noted that due to the number of courses, Ball State would take a heavy hit with the new fee. He suggested an even distribution of the subsidy for ITN rather than charge for satellite time.

Kramer added that in essence institutions generate both tuition and state appropriate dollars for credit courses on the satellite. The more you use the system, the more income you generate.

King addressed a question about the longevity of the satellite. He stated that in the initial FY 02-03 budget presented to the Management Committee in mid March, we proposed lumping two sets of one-time maintenance expenditures for the satellite system into a budget line of $180k. That maintenance process will be held until we receive repayment of the $450k loan to Intelenet we made from our emergency reserve two years ago. Intelenet is expected to begin repayment of that loan sometime between July 1 2002 and October 1, 2002 in $100k monthly increments. We will, at that time, reduce our emergency fund to $250k and use the remaining $200k to cover the satellite system maintenance expenses. This is an effort to preclude any catastrophic failures by investing some of the emergency fund before they happen we continue to look at satellite maintenance as a critical issue.

King added that IHETS will be experimenting with a terrestrial -based system to provide one-way video and use Teleresponse that will simulate a current satellite site for approximately $3k/year. This is not necessary meant as a replace, but might be a way to take some of the pressure off for those that the satellite fee seemed too onerous. Staff and the Integrated Technologies Committee will continue to test this technology.

Pat Smoker said that while Purdue is a substantial satellite user, he would be hesitant to support trying to pay for the satellite shortfall through increased ITN connection costs. King noted that the ITN service is separate from the satellite system. There isn’t a crossover in ITN and satellite funds. Using ground based circuits and not ITN circuits, will not necessary have an impact on whether someone needs ITN service. He noted that there will continue to be a shift and an increase in the number of courses that are generated from the institutions that will be available on two-way video using ITN network service. So when you see a shift from the satellite and an increase in the number of circuits using two-way video there is an interaction there, but there is no monetary interaction.

Sabatine noted that Ball State is also a big user of the network and after several meetings with his colleagues, they are looking an annual $75k expense and they cannot absorb it. They will try to phase out of the one-way video on satellite as quickly as possible. In his discussions Ball State is questioning whether IHETS should be spending so much on programmatic things like MERLOT and modular course development and ICN marketing support services because we are creating a competitive university for the other institutions. Is the mission of IHETS to provide the infrastructure or do we want to create another institution that serves as an educational portal with all the services and functions that go with that. Or should we be looking, because of the cost of infrastructure and the speed with which is changes, at shifting direction and spending money to make sure that we have the high quality infrastructure that all of the state institutions will need to make the state competitive as an educational provider for the citizens. He thinks this is a critical time because of what’s going on with the budget. Sabatine recommended that we take a look at where the organization is going and think about shifting resources to the development of a sophisticated infrastructure that will serve the state of Indiana out into the future.

Kramer stated that these thoughts are helpful and that we might want to do that, however this might not be the best time to do that. We can consider some of these issues in the near future.

Sabatine added that all of these cuts and redistribution that we’ve done with this budget reflects a continuation of that growth and the non-infrastructure of the institutions. Ball State is opposed to the budget, will not support it and cannot accept the proposed satellite fees.

Salary Increase (2.5% salary line) - $104k
A merit-based salary increase for IHETS staff using 2.5% of the salary pool as the basis. This will require an additional $104k reduction in overall operating expenses above the $501k (7%) reduction required because of the funding shortfall. This includes a 2.1% increase in the fringe benefits line mandated by Indiana University.

Ruble asked if we know what other institutions are providing in the way of increases. Voss reported that IU is offering 2.5% for staff and 3% for faculty, and others seem to be following in that area. State agencies increases seem to be flat. Ruble asked if there could be a political downside to providing an increase when other state agencies are not. King responded that it is possible, but he is leaning toward the recommendation from the Board last year, when salary increases were also unfunded, they encouraged IHETS to find a way to follow along with what the institutions were doing. Kramer supported the recommendation to find funds for a salary increase and would not expect any serious repercussions. Ruble added that he is trying to think about how it might be perceived by legislators. Fisher noted that the total is $105k, however, that figure includes an unavoidable $35k increase because of the higher fringe benefits. In other words, approximately $75k of that $105k would go toward wages.

King stated that if questions are raised about the salary increases in higher education, he is doubtful that IHETS would be singled out.

King added that the budget must be submitted to the IU Fiscal Office by April 23rd.

Jensen moved to approve the FY 2002-2003 budget as presented and take to the Board of Directors on April 30th. Ruble seconded the motion and it was approved without dissent.

King expressed his appreciation to staff for the work in preparing the budget and to the Committee for coming in to IHETS today to go through it.

Meeting adjourned at 2:35pm.