BOARD OF GOVERNORS WAYNE STATE UNIVERSITY Official Proceedings January 25, 2006

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1 The meeting was called to order at 2:00 p.m. by President Irvin D. Reid in Room B/C of the McGregor Memorial Conference Center. Secretary Miller called the roll, and the following Board members were present. Governors Abbot, Bernstein, Driker, Dunaskiss, Hardy, Massaron, Miller, and Washington; and President Reid Also Present: Provost Barrett, Vice President and General Counsel and Interim Executive Vice President Lessem; Vice Presidents Burns, Davis, and Oliver; and Secretary Miller CONSENT AGENDA ACTION Upon motion by Governor Miller and seconded by Governor Dunaskiss, the Board of Governors approved the Consent Agenda as presented. The motion was adopted unanimously. The Consent Agenda includes the following items: From the Board Materials 1. Approval of the Official Proceedings of the November 30, 2005 Regular Meeting. 2. Personnel Recommendations From the Budget and Finance Committee 3. Freer House Cooling Tower Replacement 4. C.S. Mott Renovation of Second and Basement Floors 5. C.S. Mott Vivarium Renovation Woodward Mechanical System Upgrade The individual motions for each item on the Consent Agenda are listed below. A complete report of the discussion of agenda items that appeared in committee can be found in the Minutes of that committee. Official Proceedings November 30, 2005 ACTION Upon motion by Governor Miller and seconded by Governor Dunaskiss, the Official Proceedings of November 30, 2005 were approved as submitted by the Secretary. The motion was adopted unanimously. Personnel Recommendations Provost Barrett presented the personnel recommendations listed below. ACTION Upon motion by Governor Miller and seconded by Governor Dunaskiss, the personnel recommendations were approved and action authorized in accordance therein. The motion was adopted unanimously. College of Liberal Arts and Sciences Michael Belzer, tenure transfer from College of Urban, Labor and Metropolitan Affairs, to the College of Liberal Arts & Sciences, Department of Interdisciplinary Studies, effective November 28, School of Medicine Ray Bahado-Singh, for appointment as subsidy conditioned professor in the Department of Obstetrics and Gynecology, effective September 15, Professor Bahado-Singh will serve as Associate chair. Jason Mateika, for change in tenure status, from continuing fractional 50% tenure per University year in the Department of Internal Medicine to continuing tenure per University year in the Department of Physiology, effective October 1, Professor Mateika will hold a joint appointment in the Department of Internal Medicine. Vincent Palusci, for appointment as the Helppie Endowed Professor in the Department of Pediatrics, effective October 1, 2005 through June 30, Manuel Tancer, for appointment as the Elliot D. Luby, M.D. Endowed Professor in the Department of Psychiatry and Behavioral Neurosciences, effective October 1, 2005 through June 30, Special Notes for Information Only Richard Gabrys. The President is pleased to announce the appointment of Richard Gabrys as interim Dean of the School of Business Administration. The assignment will be effective January 1, 2006, subject to the pleasure of the President or his/her designee during the term of the assignment. Freer House Cooling Tower Replacement The Freer House, located at 33 East Ferry Street, was built in the late 1880s and is on the National Historic Register. The house is presently cooled using a number of floor-mounted air-conditioning units, and the administration recommended the replacement of the cooling tower and reconfiguration of the associated piping from the floor units in order to cool the building properly and efficiently. ACTION Upon motion by Governor Miller and seconded by Governor Dunaskiss, the Board of Governors authorized the President or his designee to design, solicit bids, and award contracts for the Freer House Cooling Tower Replacement project, in an amount not to exceed $175,000. Funding for this project will be provided from deferred maintenance reserves. The motion was adopted unanimously. 6293

2 C.S. Mott Center for Human Growth and Development The Mott Center is one of the University s most prominent research sites with its mission of targeting human reproduction and developmental disorders. Built in 1973 and located at 275 East Hancock, the building provides research, administrative and clinical space from the basement to the third floor. Since 2000 the Mott Center has received funding for deferred maintenance projects that replaced the chiller plant and upgraded the electrical service, including an emergency generator. In 2002 the School of Medicine won a national competition to have the National Institutes of Health (NIH) Perinatology Research Branch (PRB) locate its research operations in the Mott Center, and the third floor of the building underwent a comprehensive renovation that was completed in January During that renovation, the University submitted two Facilities Construction Grant applications to the NIH s National Center for Research Resources (NCRR). Both grants were awarded and are part of the funding sources for the two renovation projects of the Mott Center listed below. Renovation of Second and Basement Floors The School of Medicine proposes to renovate the basement floor and a portion of the second floor to further improve research space for its expanding Obstetrics and Gynecology programs. The renovation will provide more efficient and flexible laboratory modules as well as improvements of all mechanical systems. In addition, the Center for Genomics and Bioinformatics, currently housed in the Biological Sciences Building on the main campus, will move to the Mott Center s ground floor, thus moving it closer to its customers in the PRB and ObGyn departments. ACTION Upon motion by Governor Miller and seconded by Governor Dunaskiss, the Board of Governors authorized the President or his designee to design, solicit bids, and award contracts to renovate the C.S. Mott Center to support the proposed National Institutes of Health (NIH) National Center for Research Resources (NCRR) Research Facilities Construction Grant for a cost of $6,285,000. Funding for this project will be provided from three sources; $2,467,800 will be provided from a NIH NCRR Facilities Grant, and $3,817,200 will be funded from the bond proceeds generated through the sale of general revenue bonds, Series 2004 sold in January 2004 to fund various laboratory improvement projects. The motion was adopted unanimously. Vivarium Renovation The Department of Laboratory Animal Resources maintains a vivarium on the second floor of the Mott Center adjacent to the space to be renovated for the ObGyn program. The proposed project would renovate animal holding rooms and install new laboratory equipment. All mechanical and electrical systems would be upgraded, including improvements that would meet NIH requirements for 100% outdoor air. ACTION Upon motion by Governor Miller and seconded by Governor Dunaskiss, the Board of Governors authorized the President or his designee to design, solicit bids, and award contracts to renovate the vivarium at the C.S. Mott Center for a project cost not to exceed $1,675,000. Funding for this project will be provided from three sources including $620,000 from a National Institutes of Health (NIH) Research Facilities Improvement Grant, $405,000 from the Office of the Vice President for Research, and $650,000 from reserves set aside for deferred maintenance projects. The motion was adopted unanimously Woodward Mechanical System Upgrade The administration recommended mechanical system upgrades to the building at 5425 Woodward as part of the Facilities Planning & Management Department s Chiller Modernization Master Plan, completed in November The chillers and associated systems have already been upgraded at several buildings, and the projects have been an integral part of the University s cost-reduction efforts with respect to steam costs. The proposed project will replace the existing chiller and associated systems and upgrade the building s electrical system. ACTION Upon motion by Governor Miller and seconded by Governor Dunaskiss, the Board of Governors authorized the President or his designee to design, solicit bids, and award contracts for the 5425 Woodward Mechanical System Upgrade project, in an amount not to exceed $825,000. Funding for this project will be provided from deferred maintenance reserves. The motion was adopted unanimously. PRESIDENT S REPORT President Reid gave the Board an update on the University s Capital Campaign. As of December 31, 2005, the campaign was at the $289.7 million mark, and has since gone past $290 million. The faculty and staff campaign reached $8 million, almost doubling its original goal of $5 million. The President remarked that this aspect of the campaign is an extraordinary success, and he hoped that the energy generated on campus will continue so that the original goal will be doubled. A campus celebration is planned in May to mark the one-year anniversary of the public announcement. It will bring together volunteers, donors, and future donors in a setting that will reflect the transformation of Wayne State University into one of the top urban universities of the 21 st century. President Reid noted a number of fundraising highlights since the public announcement that have contributed 6294

3 to the campaign s progress. The University will soon announce major commitments totaling $11.5 million from several individuals and foundations. Patrick and Joan Gossman, who both work at the University, made an estate gift of more than $1.3 million to the College of Liberal Arts and Sciences to support the Julie A. Thomas Endowed Scholarship in Psychology. Dr. Lawrence Stocker pledged $1 million to the School of Medicine to support the Lawrence L. Stocker, M.D., Ophthalmology Professorship. The fund will recognize faculty and scholarly achievement, and support the Kresge Eye Institute. James A. Anderson increased his pledge to $1 million to support the James A. Anderson Engineering Ventures Endowment Fund in the College of Engineering. His original pledge was a half a million dollars. William Davidson gave $100,000 to support scholarships for student athletes enrolled in the Law School. Mr. Davidson himself is a graduate of Wayne State University s Law School, and also had spent his sophomore year here at the University. He was to have been awarded an honorary degree at the December General Commencement, but was not able to make it to Cobo Hall because of inclement weather and poor health. President Reid said that the degree was presented to Mr. Davidson at his Auburn Hills headquarters during a national annual meeting of his top executives. The University was represented by five Board members, several executive officers, and the Dean of the Law School. President Reid added that almost $14 million in proposals are awaiting decisions from five potential donors. In February and March, he and Susan Burns will visit major gift donors and prospects, first in southern California and then in Florida, who have a serious commitment to the University and are searching for ways to honor that commitment. The Florida trip will conclude with an event hosted by former Board member Michael Timmis and his wife Nancy in their home in Naples. Wayne State University is working with the Wang Foundation to develop several programs. Dr. Peter Wang and Dr. Grace Wang, both of whom hold their Ph.D.s from Wayne State University, are planning a major initiative for China, where WSU students will be studying there in the home-stay program, and Dr. Peter Wang has offered his home for the U.S. Open Golfing at Pebble Beach as a fundraiser for the University in support of that program. BOARD COMMITTEE REPORTS The two standing committees listed below met on the morning of January 25, The Minutes of each Committee provide a full report of discussions of all action and informational items that appeared in committee. Academic Affairs Committee The one item on the Academic Affairs Committee agenda was a presentation on the Office of International Programs by Provost Barrett and Dr. David B. Austell, the new Executive Director of International Programs at the University. Dr. Austell discussed the demographics of the international student population at Wayne as well as how the University is preparing its students for the realities of globalization. Budget and Finance Committee All the action items on the Budget and Finance Committee agenda were included in the Consent Agenda that was approved at the beginning of the Board meeting. The Committee also received the following reports: General Fund Budget Performance Report, FY 2005 This report compares actual revenues and expenditures for the fiscal year to approved budget amounts, and the resulting fund balance at September 30, In summary, the fund balance grew by 2.2%. While most of these funds are committed, a balance of $400,000 is uncommitted and will be carried forward in anticipation of a possible enrollment shortfall. Audited Financial Report, FY 2005 The administration submitted the Combined Financial Statements of Wayne State University as of September 30, The auditors report and the financial statements have been reviewed and discussed in detail with the Audit Subcommittee. Michigan Universities Self-Insurance Corporation (M.U.S.I.C.) Vice President Davis presented the annual M.U.S.I.C. report for the year ended June 30, The program provides insurance coverage to 11 state universities at significantly lower cost than traditional markets, and has benefited the University through the return of dividends. Contingency Reserve The Budget and Finance Committee approved the transfer of $50,000, leaving a balance of $350,000. The funds will cover expenses related to a search for a new Executive Vice President and Chief of Staff. The complete report of the Contingency Reserve is as follows: FY 2006 Allocation $500,000 Transfers: November, 2005 (100,000) Balance available FY 2006 $400,000 Transfer approved by Budget & Finance Committee, January 25, 2006: Executive Vice President and Chief of Staff search ($50,000) FY 2006 remaining balance $350,

4 REPORTS FROM THE UNIVERSITY ADMINISTRATION The Provost and vice presidents presented the written informational reports listed below describing activities in their divisions. The reports are on file in the Office of the Secretary. Academic Affairs Informational Report Provost Barrett Governmental Affairs Vice President Hollins President Reid added that he will join Vice President Hollins in Lansing, where they will listen to the Governor s message at the joint meeting of the Legislature that evening. Development and Alumni Affairs Vice President Burns Vice President Burns said that the numbers the President reported for the capital campaign were not identical to those in the written report because gifts received by year-end, December 31, were not processed in time for the written report. These gifts will be reflected in the March meeting report, together with a number of new endowments that will include year-end gifts made by President Reid. The President s personal commitments to the Capital Campaign now exceed $600,000. Public Relations Report Executive Vice President Lessem ESTABLISHMENT OF ENDOWMENT FUNDS Vice President Burns presented the endowment funds listed below for approval. ACTION Upon motion by Governor Dunaskiss and seconded by Governor Washington, the Board of Governors established endowment funds that total $753,543, for the purposes presented. The motion was adopted unanimously. 1. The James A. Anderson Engineering Ventures Endowment fund to fund programs directly related to educating and mentoring students on how to bring ideas and products to market in a real-world setting. $300, The Leonard Kaplan Endowed Professorship in the College of Education to seek an outstanding scholar who is prepared to instill inclusiveness in teacher candidates so they will respect the diversity of all students, address the needs of every students and be committed to helping each student succeed in school and life. $296, The David J. Morgan Endowed Scholarship (Fund Functioning as an Endowment) to recognize scholastic achievement, to encourage continued progress, and to provide assistance to students in financing their education in the College of Education. $32, The George A. Peck Endowed Scholarship for Superior Advocacy to recognize scholastic achievement, to encourage continued progress, and to provide assistance to students in financing their education in the Law School. $25,000 DISSOLUTION OF ENDOWMENT FUND In May 2004 Dr. Lorna Thomas contributed funds to the University to establish the Joseph Ferguson, M.D. Endowed Research Award in the School of Medicine. She recently requested through her attorney that the endowment be dissolved and funds returned, and the administration believes it is in the University s best interest to honor the request. ACTION Upon motion by Governor Dunaskiss and seconded by Governor Washington, the Board of Governors dissolved the Joseph Ferguson, M.D., Endowed Research Award Fund and dispersed funds as recommended. The motion was adopted unanimously. EXECUTIVE COMMITTEE REPORT Governor Washington reported that the Executive Committee of the Board of Governors met earlier in the day and deliberated on several items on its agenda. She presented several recommendations on the President s employment contract as well as on real estate property for the Board s consideration. Modifications to the President s Employment Contract Governor Washington presented three separate resolutions that would modify President Reid s employment contract. 1. Changes to the President s Defined Benefit Plan and Supplemental Annuity WHEREAS, the Board of Governors of Wayne State University (the Board ) has reviewed the performance of President Irvin D. Reid, and wants to make modifications to the President s contract with the University; and WHEREAS, the Board has approved certain changes to the President s defined benefit pension plan in response to changes in the Internal Revenue Code; and WHEREAS, President Reid s current defined benefit pension plan will provide an annual annuity of $20,000 and WHEREAS, President Reid has previously been 6296

5 granted a supplemental annual annuity in the amount of $55,000, consisting of $30,000 from Wayne State University and $25,000 from the Wayne State University Foundation; and WHEREAS, the Executive Committee of the WSU Foundation has recommended to the Foundation Board of Directors that it complete its defined benefit match by raising its current $25,000 annual annuity by an additional $25,000 annual annuity, in recognition of President Reid s service to the Capital Campaign, and WHEREAS, modifications to the Defined Benefit Plan approved by the Board of Governors in Executive Session on December 14, 2005 are now submitted to the Board for ratification in public session; and WHEREAS, the Board intends to implement further adjustments to the President s compensation and benefits in consideration of the President s outstanding performance last year and the expected continuation of such outstanding performance, and will bring those adjustments forward under separate resolutions at this meeting; NOW THEREFORE BE IT RESOLVED that President Reid s Defined Benefit Plan be modified in the following respects: Change the involuntary cashout amount of the Defined Benefit Plan from $5,000 to $10,900, to comply with new tax law. Amend the Defined Benefit Plan to allow President Reid to begin receiving the payout of benefits at any time after attaining age 65, even if he is still employed at the University. Amend the Defined Benefit Plan to provide for an actuarially increased benefit if President Reid does not begin taking payments at age 65. The Chair of the Board, the Vice President for Finance and Facilities, and the Vice President and General Counsel are authorized to perform any lawful acts necessary or appropriate to implement the foregoing resolution and the transactions contemplated thereby, including the execution and delivery of any instruments, agreements and certificates, the execution of any such instruments or the taking of any such action being conclusive evidence that the same shall have been approved. ACTION Upon motion by Governor Miller and seconded by Governor Hardy, the Board of Governors accepted the Resolution as presented that would effect changes to the President s defined benefit plan and supplemental annuity. The motion was adopted unanimously. 2. Other Changes to the President s Contract WHEREAS, the Board of Governors of Wayne State University (the Board ) has reviewed the performance of President Irvin D. Reid, and wants to make certain changes to the President s contract with the University; and WHEREAS, the Board wants to affirm its confidence in and commitment to President Reid s leadership as the ninth President of Wayne State University; and WHEREAS, the Board intends to implement further adjustments to the President s compensation and benefits in consideration of the President s outstanding performance last year and the expected continuation of such outstanding performance, and will bring those adjustments forward under separate resolutions at this meeting; NOW THEREFORE BE IT RESOLVED that President Reid s contract with the University be modified in the following respects: The President s employment contract shall be extended through February 20, The President will be allowed to retain research space, annual and accrued research stipends, administrative offices, an administrative assistant and secretary for the remainder of his time at the University, should he serve in a capacity other than President before retiring from the faculty. The President, with the Board s assistance, will seek funds to establish a center for urban partnerships or in a related area and will seek the assistance of the Board in creating a chair focused on community partnerships. All other provisions of the President s existing contract not covered in this or in the separate resolutions on changes to the defined benefit plan and compensation adjustments remain in effect as provided in letter of engagement dated June 10, The Chair of the Board, the Vice President for Finance and Facilities, and the Vice President and General Counsel are authorized to perform any lawful acts necessary or appropriate to implement the foregoing resolution and the transactions contemplated thereby, including the execution and delivery of any instruments, agreements and certificates, the execution of any such instruments or the taking of any such action being conclusive evidence that the same shall have been approved. Members of the Board of Governors made the following statements: 6297

6 Governor Massaron It is my intention to vote no on this particular extension of the contract to I think it is important to say these things. I believe there have been a number of accomplishments that have been achieved by the President. I am also deeply concerned, however, that this Board has two fundamental jobs to do. One is to hire the President under the Constitution, and the second thing is to deal with budget and policy of the institution. I believe strongly that this should have been considered at the end of 2006, beginning of 2007 because the contract in fact terminates in September The reason is that I cannot myself see a complete vision of this University as demonstrated by the President going forward to I think I would have had a better opportunity to see it if we would have had another year. The vision that I see right now and remains, at least no one has told me otherwise, is a vision with regard to the tuition strategy in which we did the 18.5%, and it was the administration that was the architect of this, and then when the Governor and the Legislature came up with the money that they were going to cut, evidently there was not an inclination to move back that 18.5% as it impacted the people who come to school at this institution. Further, there is a strategy, a tuition strategy that goes forward, and nobody has disabused me of that, of 13.5% this coming year, 13.5% the next year, and 13.5% the following year, which if you add all of that together, and you did the appropriate roll-up, you get almost a 70% increase in a four-year period. And the fact of the matter and the most important thing has to do with what it costs people to come to this institution in these times and in any economic times, but especially in these times. I do not see a vision other than increases in tuition and not coming to grips with the structural problems of this University. Someone had said to me, well, why don t you abstain and maybe send a message across the bow to people. And I happened to look at this book this morning in which it says you cannot be neutral when there is a train running, when you are on a train that is running. And I do not think it is possible to be neutral here. I think it is important that we end up with a strategy that does not mean we are going to have tuition increases that are not sustainable, and that we change the student body that we have right now and who we serve by virtue of the continuous raises in tuition. That is not to say that other things that have gone on are not good. But the heart of the question, and the heart of the future of Wayne State University, has to do whether Wayne can fulfill its mission, and that is why I am voting no. Governor Driker I would like to speak in support of the resolution. The resolution is not a tuition resolution; the resolution deals with extending the President s contract by approximately three and a half years. And the question as I see it is, is it to the benefit of the University to assure stability and continuity at a time when there is much uncertainty and tumult in the local economy, in the state higher education system, and in the affairs of the city, area, and state in which we live. I think we all know from the headlines day to day just how difficult a time our region and our state have gone through, and despite those difficulties, I believe that President Reid has led the University with tremendous vision and skill. That really has shown up in many, many different ways, not the least of which is the Capital Campaign report about which we just heard a moment or so ago. Tuition is not adopted by the President; it is adopted by the Board of Governors. If there is blame to be laid about tuition increases, it is those of us who are sitting around the table who are to blame, at least those who voted for the increases; not the President. The President can propose, it is the Board of Governors duty to dispose. So I think it is really unfair to lay in the President s lap the blame, if you will, for increased tuition. Those of us like myself who voted for increased tuition last year did not do so because we thought it would not matter to our students. I think we all know intuitively that it matters greatly to our students. We have all talked both privately and publicly repeatedly about the importance of Wayne to people who might not otherwise have an education, if Wayne were not here, and that includes myself and my wife. And we talk about access, but the question is access to what. And I think what we have seen, certainly in the Michigan economy and southeastern Michigan in particular in the last couple of years, is that if we do not provide our students with a first-class education that rivals the education they can receive on the east coast or the west coast or the sunbelt or in other countries, they will not be able to compete in a new global economy. So those of us who felt the need, reluctantly, to increase tuition last year did so because we have all seen the impact that inadequate or diminished state resources have had on this institution. Since we have a proportionally greater dependency on state appropriations than our sister institutions in Lansing and in Ann Arbor, these seemingly equitable cuts across the board strike us proportionally much heavier than they strike those institutions. It has been quite difficult, I think, for the President and his cabinet and the deans to deal with diminished resources when they also have the demands of faculty and staff and students, for top-notch libraries, for top-notch labs, for top-notch classrooms, for top-notch faculty. Our most important assets are our faculty. They walk out the door each night at 5 o clock, and they can keep walking if they want to. And we have to be sure that we raise enough money to not only retain the existing faculty we have, but attract new young faculty. You cannot do that with inadequate resources. 6298

7 I wish that our President had been able to give $600 million instead of only $600,000 to the Capital Campaign. I wish Susan s error was not an error, and that we were in the hundreds of millions of dollars. But we are not. So we have to deal with the cards that are played to us. I think that those of us who feel that the President has had a vision, a consistent vision, since he first arrived here of furthering the University as an economic engine for southeastern Michigan feel confident that ensuring his continuation here for another three and one-half years beyond his existing contract will frankly send him a message that we want him to stay here and continue working for the University. The one thing that I have seen in my little over three years on the Board is that being the President of a University like this is a 24-hour-aday, seven-day-a-week job. All of us sitting around this table know how many s we get from the President that are dated four o clock in the morning. So this is a job when you are never off duty, and I think President Reid has done it with great skill and great leadership. So I think that this is in our best interest to extend his contract. We should all remember that the contract he has, the form of the contract he has, which is going to continue forward, allows the Board in its discretion to terminate the President at any time, should it want to. I say that not because I think that that is going to happen or should happen. To the contrary, I hope he stays until the end of this extended contract. But we want to send a message I want to send a message, I will speak for myself. I want to send a message to him, to the faculty and students, that I am comfortable with his leadership and I look forward to him continuing enthusiastically in his effort to advance the University, and I think that can best be accomplished by giving him this sign of confidence from the Board of Governors. Governor Bernstein This is one of those issues where I feel it is incredibly important to depersonalize the issue. This is not an issue that we should look at in any way as a personal assault, in any way a personal attack, or in any way a personal judgment. But as a member of the Board, when we come to this Board we come to this Board with certain beliefs, certain principles, and certain values, which are usually the cornerstone of why we decide to run and become elected into this kind of a position. And one of the issues that I think is crucial is that ultimately when we go forth and we vote on this issue, it really comes down to the paradox that the University, or the crossroads that the University finds itself within. I have served on this Board for nearly four years, which is a pretty long time. And I think the issue that I have coincides similarly to that of the issue of Governor Massaron, in that what Governor Massaron said I believe is very true, which is that really what we are voting on today is in no short really the future of this institution in terms of where the priorities are. Everybody likes to see urban revitalization, everybody likes to see dorms, everyone likes to see a new student center, everybody would like to see a new hotel go up. But the question is, where do the priorities go. And I have a strong belief in terms of the priorities that coincides with Governor Massaron, which is that the number one priority of this institution, and as Governor Driker spoke so eloquently about, the concept between quality and access. But I have a very strong belief that access should really be our paramount of importance. I have seen, as I have gone forth and seen what has happened in the last few years, that the priority has shifted away from access and into new large building like the dormitories, and into other large building projects. And I believe that if you look at what the identity of this institution is, it is moving away from that of what I ran for, just four years ago. I have a strong belief that this institution is moving in the direction that the rest of our country is moving in, which is it is limiting access to middle class and working class people. And ultimately, as we look at that situation, we look at what is happening in that, I believe that middle class, working class folks are having a harder and harder time being able to attend this institution and to partake in what this institution has to offer, and what this institution represents. Though I respect the work that is being done, I have a strong belief that the direction this institution is going is shifting away from that of middle class and working class people s opportunity to be able to attend. And I do not believe that if you were to look at the current trends and currently what has been happening, that that has been the true priority of the institution. I believe it has been one of them, but I do not believe it has been the core value or core principle that this institution is governed under. And the main reason that I intend to vote No on this issue again, it is not at all personal, and I believe, as the governors talk here, the reason that I believe it is important to have these discussions and have these discussions in public is for people to see that we can discuss, that we can debate, but we can do it without personal rancor and we can do it without personality as a consequence of that or as a part of that. But the thing that I am concerned about here, on top of that I had just said, is ultimately the timing of this, which is that there is quite a bit of time left on the current contract. And I am a believer when you enter into a contract as this contract was entered into, it was originally a five-year contract, that when you enter into such a contract, that I believe it is important to state the terms of that contract as it was entered into. I see no reason at this current time why we should be renegotiating a contract that was entered into for a certain period of time. I do understand that a few months out, then it is appropriate to start renegotiating or appropriate to start discussing these issues. But I think on a policy basis that ultimately when you enter into these arrangements, when you enter into these negotiations, the arrangements and 6299

8 the negotiations that are entered into should be that of what they are entered into. So that when the five years of this current contract lapses, then we can have a discussion and look at what we should do for the future. But I believe that it is important that the same standards that are applicable to all the other people that work on this campus, students, our faculty union, the people that maintain our campus, we have entered into a number of contracts with a number of different people, and when we enter into those contracts with those different people, no matter what part of the campus they represent, we expect those individuals to adhere to those contracts. And we have a standard that says, if you enter into a contract with this institution, we are going to hold you to that contract until that contract s duration. I really believe it sets forth a double standard when you allow for chief executives to be able to not have to follow the same guidelines and the same principles that we hold other people on this campus to. So my perspective on this whole entire thing is I really question, number one, in a non-personal way, I question the priorities of the institution, but as it relates to this specific motion, as it relates to this specific item, I am a strong believer that this is not the appropriate time and not the appropriate way for this to be done. And it would really be my hope that other universities throughout the state would hopefully start acting in the same way. That when you enter into a contract with your chief executive, that you should not begin renegotiating those contracts or not adhering to those contracts until a time that is appropriate. And the fact is that we are not far enough into this contract at this point, although it has gone on for some time, and I mean to say that we are not far enough out of this contract, that we should be renegotiating it at this time and at this moment. So I do not believe that it is a sensitive thing to do to the other people that work on this campus, and I believe that it is something that we as a Board should really debate and discuss. But I plan to vote No on this simply because I really disagree with a double standard that we are holding chief executives to and that we are not holding, or that we are not having on the other people who work on this campus. And I hope that other universities would start to follow this and start to rein in what is happening with executive compensation at the higher levels. And we will get to that in a second motion, but I believe I have completed what I have to say now at this point. Governor Hardy I am supporting this resolution and very enthusiastically. I agree with the vein of the comments made by our colleague, Governor Driker, in particular the point that it is in the best interests of the University to do what we can to retain President Reid to help us get through these turbulent times. And we need to look further down the road than just September We need to have a game plan that takes us further into the future with the stability of the leader of this institution. This is not just an officer of this institution; this is not just a faculty member. This is the President who is responsible for providing the leadership and assisting the Board with the advice that we need to make the important decisions. And I just cannot imagine the position we would be in if we were trying to replace President Reid within the next couple of years. I think we would do substantial damage to this institution and we would have a tremendously difficult time finding somebody of his caliber to come in on his heels. And we also need to have somebody who is as invested as he is in the issues, both in Lansing, on campus, with the community. He is an investment that we have invested in. And I think from a very selfish point of view, to really see our investment through, we want to keep him here and let him finish the job. And it is also important to let him know, to keep him motivated, that we do appreciate him and we do want him, and we do value him, and we do think he is important to the future of this institution. And by agreeing to this resolution as well as the other resolutions that are going to come before us, I think we send that message. And I hope it is well received, and I hope I am still getting s at 4 in the morning in 2011 and we may even be talking to him about continuing the contract at that point in time, if he still has the level of energy that he has demonstrated since he has joined us in Governor Bernstein asked for a roll-call vote. ACTION Upon motion by Governor Hardy and seconded by Governor Dunaskiss, the Board of Governors adopted the Resolution as presented that would effect changes to the President s contract. The motion was adopted with the following roll-call vote: Governor Abbott No Governor Bernstein No Governor Driker Yes Governor Dunaskiss Yes Governor Hardy Yes Governor Massaron No Governor Miller Yes Governor Washington Yes 3. Changes to the President s Compensation Plan WHEREAS, the Board of Governors of Wayne State University (the Board ) has reviewed the performance of President Irvin D. Reid, and wants to make certain changes to the President s contract with the University; and WHEREAS, the Board wants to adjust the President s compensation and benefit package in accordance with the agreement to review annually his engagement as the ninth President of Wayne State University; and WHEREAS, the President received no increase in 6300

9 salary in 2004, and very modest increases in salary in the last several years; and WHEREAS, the Board intends to implement further adjustments to the President s compensation and benefits in consideration of the President s outstanding performance last year and the expected continuation of such outstanding performance, and will bring those adjustments forward under separate resolutions at this meeting; NOW THEREFORE BE IT RESOLVED that President Reid s Compensation Plan be modified in the following respects: Changes to Base Salary Increase the President s Base Salary by $10,000, effective 10/1/05 Increase the President s Base Salary by an additional $10,000, effective 10/1/06 Increase the President s Base Salary by an additional $10,000, effective 10/1/07 Increase the President s Base salary by 4.5% in years 2008, 2009, and 2010 Rollover of Deferred Compensation Plan Terminate the President s deferred compensation plan at the end of 2006, and add the deferred compensation from the Board of Governors and the Foundation to the President s base pay. Additional Changes to Defined Benefit Plan Incorporate into the Defined Benefit Plan the current annual supplemental benefit of $30,000, the current Foundation Board component of $25,000, and an additional $25,000, the cost of which will be set off by the anticipated contribution by the Foundation Board. Include an additional provision to the Plan which would grant an additional $5,000 annual benefit each year that President Reid is employed as University President beyond October 1, 2006 until February 1, The maximum amount that would be credited under this provision is $25,000. Apply the Consumer Price Index, all urban consumers, Detroit-Ann Arbor city average, to payments made under the Defined Benefit Plan. The Chair of the Board, the Vice President for Finance and Facilities, and the Vice President and General Counsel are authorized to perform any lawful acts necessary or appropriate to implement the foregoing resolution and the transactions contemplated thereby, including the execution and delivery of any instruments, agreements and certificates, the execution of any such instruments or the taking of any such action being conclusive evidence that the same shall have been approved. Board members made the following statements: Governor Miller I would like to make a comment. I would like to note that Wayne State University still is below the median in the state for tuition raises, so that we are not outpricing middle class kids in the state. They are still going to other state universities and colleges that are more than our university. And yet we are offering them more and more on our campus, and this increase in efforts to offer more is really attributed to the President that we have. The second part of this equation is that our President s current salary is far below that of the other two big universities certainly, and below that of many of the other colleges in the state. So I am wholeheartedly in support of what he has done so far for our campus, because I know it has enhanced our campus and made it much more acceptable to people from both the city and outside the city to come here. They know they are getting a good education on a campus that they enjoy being on. In the past, students coming here for night classes walked in fear. Now that we have people living on campus and we have more lights on campus, people are on the campus in the evening and people are not afraid to come here in the evening for their courses any more. That is thanks to our President, too. I think that the interpretation of what is happening here today should not go out with any kind of negative for what has happened over the past eight, nine years that our President has been here. He has been here actually about the same time as I have. And I really appreciate the changes that he has helped to make. Governor Driker I strongly support this resolution, consistent with the comments I made a moment ago about extending the term of the President s contract. I agree with Governor Miller that he has been woefully underpaid as President. I remember about two and a half years ago when the then Provost Charles Bantz left Wayne to become the president of a much less complicated university, Indiana University, without a medical school and without nearly the kinds of complicated issues that Wayne has, and at that time he left here and took a job where his new presidency two and a half years ago paid $250,000 as publicly reported. That was about 20% higher than the President of our institution was making at that time. The President of Wayne s salary has continued to erode in comparison to peer institutions not only in Michigan but throughout the country, while the job has become immeasurably more challenging and complicated. 6301

10 Again, we are all sensitive to the financial constraints that the University has, but you cannot visit those problems on the head of your president. He cannot carry the financial burdens of the university on his shoulders, although frankly the $600,000 gift that he and his wife made to the University, which is unprecedented in Wayne s history and I suspect unprecedented in the history of any Michigan college or university, certainly bespeaks his loyalty and interest and dedication to this institution. Giving the President a $10,000 pay raise effective as of October 1, 2005 is about a 4.5% pay increase. This morning s Free Press has got an article on page 1-B: U-M Officer gets pay raise; Timothy Slottow, the chief financial officer at the University of Michigan got a 41% pay raise yesterday, bringing his salary to $425,000. That is about twice what President Reid is making. I suspect that the chief financial officer of the University of Michigan perhaps I should not say this in front of John Davis, John you might want to leave the room probably serves in the same capacity as John Davis. So perhaps the third or fourth or fifth ranking officer at the University of Michigan has now received a salary of at least $425,000. We all know that the President of the University of Michigan receives a base salary of $500,000 plus extensive benefits beyond that. This is a very complicated place. The events of this past year, with the Medical School, with the State of Michigan, with heating the campus, with bringing new buildings on line, with dealing with tuition problems and faculty needs this is a tremendous juggling act, and again I think the President has done it with tremendous energy and grace and a sense of humor which is not always easy in these circumstances. I would have preferred that we increase his salary $30,000 right away, but the economic reality did certainly temper my thinking on this and I think that of most of my colleagues. And even though a $10,000 raise after no raise at all last year means that over a two-year period he will be getting about a 2.2% increase per year, I think that is still woefully below the market. And we know this from the published data in the Chronicle of Higher Education. We know that the median, the midpoint of college presidents of institutions of this size and complexity, is over $250,000. We are taking him from about $220,000 to $230,000 in base salary, and adding a like amount in each of the succeeding years. I want to point out that on this defined benefit plan, the president s pension plan, this additional $25,000 that we are adding, which gets paid when he retires, comes from the Wayne State Foundation, not from the University. The Wayne State Foundation Board, when it first decided to participate in the President s compensation package two years ago, at the outset thought it wise to have a $50,000 annual retirement benefit for him, but chose to give him kind of a carrot too, and said we will give you $25,000 now and hold the other $25,000 in abeyance to see how the capital campaign goes. And the Board of the Foundation has enthusiastically said now is the time to give President Reid the other $25,000 that we contemplated a couple of years ago, because under his leadership the Capital Campaign has done so well. These things do not happen by magic. They take an extraordinary amount of hard work. Yesterday we had a meeting of one of our Board committees at 4 o clock and the President walked in as if on cue at about 30 seconds after four, having just flown in from San Francisco where he was on a gift cultivation call with one of the deans. This is a challenging, difficult job that requires adequate compensation. We are not providing the adequate compensation by any means, but at least this is a little bit of a start on the way back to some kind of economic parity, so that the consequences of all our budget problems in Lansing are not visited on his head. I do not remember the numbers for President Adamany, his salary at Temple when he left the Detroit Public Schools and went there, but my recollection is it was several hundred thousand dollars more than President Reid is making here. You have to pay people, certainly everybody what they are worth, but you need to pay your leader enough to keep them enthused and with his nose to the grindstone and committed to the organization, and I think we are making a little bit of progress in this regard, although I think it is much more symbolic than it may first appear. Governor Hardy In addition to the comment of Governor Driker, one thing to bear in mind is if we were in the position of having to replace President Reid, we would spend probably several hundred thousand dollars on the cost of a search as well as being phased with a salary for an incoming president of this much or a lot more. So, if you look at what the market suggests, this is still somewhat under the market, and if we had to find ourselves in the position of replacing him, we would be forced to contend with what the real market requires for a president of the caliber that this university needs and deserves. Governor Massaron I appreciate the comments that people have made with regard to the compensation proposal resolution #3. I intend to vote against this, and I am opposed to this on a policy basis. Let me explain why. It seems to me that we should be considering the president s wages after we complete the collective bargaining negotiations with the major groups that exist on this campus, which go on this year. It then seems to me that we could then address the question of the wages of the president. It is very important, it seems to me, that we not establish targets and standards when we are in such an economic situation that we are in, and that after those were concluded, then we ought to address the question of wages for the top officer of the institution. This is going to be a difficult 6302