5150 MINUTES OF THE MEETING of the FINANCE COMMITTEE November 19, 1964 The Finance Committee convened at 7 a.m. for breakfast at Kellogg Center. The following members were present: Messrs. Bagwell, Harlan, Huff, Merriman, Nisbet, Smith, Stevens; President Hannah, Treasurer May and Secretary Breslin Absent: Mr. Pingel Mr. Frank Hartman of Flint and Mr. Clair White of Bay City, trustees-elect, at the invitation of the Board of Trustees, met with the Finance Committee. /V *> *\ *\ rfV /v /v *\ The President welcomed Mr. Hartman and Mr. White to prospective membership on the Board of Trustees and indicated that Mr. Pingel, due to unavoidable commitments elsewhere, regretted the necessity for his being absent from this meeting. A A /V A y^ Investment Items 1. Scudder, Stevens and Clark and Mr. Earl Cress recommend the following investment items: Retirement Fund Amount Security Recommend purchasing: $10,000 U. S. Treasury 3 5/8s-2/15/66' (holding $445,000) Drury L. Porter Fund Recommend purchasing: 75 up 40 75 35 75 shs to: shs shs shs shs Marine Midland Corp. $1.20 $2.40 National Dairy Products Philadelphia Electric $1.32 Standard Oil of New Jersey 3.00 .90 Scott Paper Approx. Price Principal Income Yield 100 10,000 362 3.8% 39 84 37 90 36 2,925 90 3.1% 3,360 2,775 3,150 2,700 $14,910 96 99 105 67 $457 2.9% 3.670 3.37c 2.57c 3.1% Honorary Degree for Philip A.Hart On motion by Mr. Nisbet, seconded by Mr. Harlan, it was voted to approve the above recommendation. 2. Senator Philip A. Hart has been invited to deliver the fall term commencement address on Friday, December 11. The Faculty Committee on Honorary Degrees recommends that Senator Hart be awarded an honorary degeee of Doctor of Laws on this occasion. On motion byf Mr. Bagwell, seconded by Mr. Stevens, it was voted to authorize the conferring of the honorary degree of Doctor of Laws on Senator Hart. Approval arrangement Battelle Corp. 3. Vice President Muelder again introduced a discussion of the proposed arrangement with the Battelle Development Corporation covering cooperative development of patentable ideas resulting from University Research. A complete document is filed with the Minutes of this meeting. i Resolution approving Agricultural Memorial { Fund After discussion, it was moved by Mr. Nisbet, seconded by Dr. Smith, and voted to approve this arrangement and to authorize the completion of contractual relationsips. 4. Recommendation that the Board approve the following resolution as prepared by Attorney Carr: IT APPEARING that this institution, from the time of its inception, has recognized the development of agriculture as playing an important role for the people of this state and of the entire country, and IT APPEARING that alumni and friends of this University are desirous of con tributing to the advancement of such objects and purposes, and IT APPEARING that proper fulfillment of the responsibilities assumed requires the creation of an agency by which the objectives indicated may be accomplished, NOW, THEREFORE, BE IT RESOLVED that the Board of Trustees express its approval of said objectives by definite action establishing an agency to be known and designated as the Agricultural Memorial Fund. Such agency is expressly authorized to engage in projects for the promotion of agriculture, the dissemination of information relating thereto, the promotion of educational facilities for the benefit thereof and in the interest of all parties concerned therewith and the welfare of the people of this state and country, In the accomplishment of such purpose, the management of such fund is empowered to accept financial assistance in the form of gifts of money and property, both real,and personal, to devote all such receipts to the accomplishment of the purposes hereby contemplated, to dispose of property from time to time as may be deemed expedient subject to the approval of this Board, to devote the assets received to the purposes of the fund and to take such method or methods of procedure as are considered desirable from the standpoint of arousing public interest in said fund, in the maintenance thereof, and in the objectives sought to be attained. FINANCE COMMITTEE ITEMS, continued 4. Resolution continued: November 19, 1964 5151 I It is further provided that the activities of the fund hereby contemplated shall be under the immediate control of the director thereof who shall be the Dean of the College of Agriculture of Michigan State University. Subject to the approval of the President of Michigan State University, the director is authorized and empowered to appoint an advisory board to work with him in the development of the activities hereby contemplated, and with the approval of the President to obtain the services of such assistants as may be required from time to time in the course of the operational activity of said Memorial Fund. ;Agricultural t Memorial I Fund . j j Said Agricultural Memorial Fund shall be deemed to be in existence as of January 1, 1965L Record thereof shall be kept under the direction of the director; and at the close of each calendar year, a detailed report of the operation of the Fund and the specific action taken I in connection with its promotion shall be submitted by the director to the President of Michigan State University and to this Board. On motion by Mr. Bagwell, seconded by Mr. Merriman, it was voted to approve the above resolution. 5. It is recommended that the Board appropriate $10,000 to purchase 100 additional bicycle racks for use on the campus for storing student bicycles. $10,000 appropl for 100 add. bicycle racks 6. Request from Mr. May that the Board authorize an appropriation of $7,500 from the overhead on overseas contracts to replenish the International Travel account. $7,500 approp to replenish Int.Travel On motion by Mr. Merriman, seconded by Dr. Smith, it was voted to approve the two recommendations Acct. above. 7. It is recommended that the Board of Trustees revise its previous policy and authorize two j Approval additional paid holidays annually for classified and labor employees .-. this to be accomplished by making it a matter of policy to allow the Friday following Thanksgiving Day and one-half day prior to Christmas and one-half day prior to New Years Day in addition to the paid holidays previously approved. On motion by Mr. Nisbet, seconded by Mr. Stevens, it was voted to approve the above recommendationi 8. Mr. May reported that the total additional cost for overtime paid for the completion of the interiors and the necessary site work to make it possible to have Akers and Fee dormitories ready for occupancy at the beginning of fall term totaled $40,467. 9-. The President suggested that Mr. Stevens and Mr. Harlan be designated by the Board of Trustees to visit the University of Nigeria project between the January and February meetings of the Board. On motion by Dr. Smith, seconded by Mr. Merriman, it was voted to approve the above suggestion. 10. Acceptance of a grant from the Kresge Foundation for $200,000 to provide half the funds required for an addition to the Kresge Art Center. The letter from the Foundation follows: We are pleased to Inform you that at a meeting of our Board of Trustees today consideration was given to your letter of October 21st and earlier correspondence relative to the proposed $400,000 addition to the Kresge Art Center and the Board approved a conditional grant of $200,000 toward the proposed addition. We understand from your letter that you will provide matching funds of at least $200,000 from out-of-state student fees to cover the balance of the cost of this building project. You state that you propose to immediately begin construction. Our grant will be payable after the building is under construction and as the funds are required to cover the last $200,000 of the construction cost as suggested in your letter of October 21,1964. policy of paid holidays for classi fied and labor employee iCost ;6f ;$40,467 to I complete Fee \and Akers jMr. Stevens & !Mr. Harlan i to visit !Univ. Nigeria iproject. j Grant of !$200,000 ;Kresge Found |for add. to IKresge Art ;Ctr. On motion by Mr. Merriman, seconded by Mr. Nisbet, it was voted to approve and accept the above grant from the Kresge Foundation. 11. Report from Mr. Mky that he has received 377 shares of Selected American Shares, Inc., from Mr. Ivan Wright. This stock is to be credited to the life income contract which the University has with Mr. and Mrs• Wright. It has a value of approximately $4,235. \ Stock accepted| \ from Ivan Wright. On motion by Mr $ Stevens, seconded by Mr. Harlan, it was voted to accept the above stock. 12. Mr. May reviewed the status of the building programs involving funds appropriated by the Trustees from the Out-of-State Fee Building Fund, and the Research Overhead Fund as follows: Status of building programs. MICHIGAN STATE UNIVERSITY SCHEDULE OF COMMITMENTS ON FUNDINGS CONSTRUCTION IN PROGRESS - SCIENCE AREA AS OF AUGUST 22, 196^ Project Cost Indirect Expense General Funds State Out Fee State Approp Federal Grant Computer $1,450,000 $1,050,000 $ -0- Cyclotron 2,773,000 1,100,000 300,000 $ $ -0- -0- $ -0- $400,000 NSF -0-$1,373,000 NSF m _ JkCi^VS^.: 5152 FINANCE COMMITTEE ITEMS, continued 12. Status of the building programs continued: November 19, 1964 v.. Project Cost Chemistry and Indirect Expense General Funds Out State Fee State Approp Federal Grant -0- $ 650,000 $ 6,000,000 -0- Biophysics Lab $ 6,775,000 $ 125,000 Biochemistry 5,200,000 1,100,000 Veterinary Medicine 4,700,000 1,237,000 Psychology 890,000 500,000 - 0- 1,625,000 - 0- 2,725,000 $ 90,000 - 0- -0- -0- — V* $1,262,000 NIH 1,213,000 NSF , _ 738,000 NIHJjrl 300,000 N S FM $21,788,000 .$ 5,112,000 $ 390,000 5,000,000 $6,000,000 $5,286,000 ALLOCATION OF INDIRECT EXPENSE CONSTRUCTION IN PROGRESS - SCIENCE AREA lotal r 1961- -61 1962-63 1963-64 1964-65 $ Computer Cyclotron Chemistry and Biophysics Lab. Biochemistry Veterinary Science Psychology $ 1,050,000 1,100,000 $ -0- -0- $1,050,000 1,100,000 $ -0- -0- $ -0- :..-0= 125,000 1,100,000 1,237,000 500,000 5,112,000 $ -0- -0- -0- -0-. -0- -0- -0- 125,000 1,100,000 110,000 -0- 1,335,000 $" -0- -0- 1,127,000 200,000 $1,327,000 300,000 ' $2,450,000 ALLOCATION OF OUT OF STATE FEES Total 1961-62 1962-63 1963- -64 1964-65 -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- Computer Cyclotron Chemistry and Biophysics Lab. Biochemistry Veterinary Sci. Psychology $ 650,000 1,625,000 2,725,000 -0- $5,000,000 $ Computer Cyclotron Chemistry and 6 Biophysics Lab.>^ Biochemistry Veterinary Sci. Psychology -0- -0- ,000 000 -0- -0- -0- ,000 $ 6, 000 650,000 -0- -0- -0- $ 650,000 1 -0- ,625,000 725,000 = - 0- $2 ,350,000 -0- -0- ,000 -0- 1 ,000 $1 ,000 ,000 -0- -0- $1,000,000 -0- $1,000,000 ALLOCATION OF STATE APPROPRIATIONS -0- -0- -0- -0- -0-c -0- -0- $ -0- -0- 000 750 $ -0- -0- 2 ,500,000 $ -0- -0- ,000 $2. ,750 -0- -0- -0- 000 -0- -0- .-0-. ,500,000 2 $ -9- -0- -0- ,000 750 $2: $ 750: Mr. May distributed copies of a proposed Building Program as follows: Federal Estimated Grants Cost Gifts Project Plant Science Building Kresge Art Center Addition Life Science Building Giltner Hall Aterations Utilities to Life Science Area Reclocate Safety Services Relocate Poultry Agricultural Engineering Addition Speech-Hearing Clinic Audiovisual 2,660,000 450,000 6,750,000 1,0.00,000 880,000 350,000 350,000 500,000 700,000 250,000 13,890,000 $ 200,000 650,000 $2,310,000 $3,918,500 175,000 250,000 350,000 M.S.U. $ 350,000 250,000 2,181,500 1,000,000 880,000 350,000 350,000 250,000 175,000 250,000 $1, 025,000 $6,828,500 $6,036,500 Plant Science Building Kresge Art Center Addition Relocate Safety Services Relocate Poultry Giltner Hall Alterations FUND REQUIREMENTS 1165-6JL 350,000 250,000 350,000 350,000 1,000,000 1966: •£L 1967^68 continued I I I fa . 1 FINANCE COMMITTEE ITEMS, continued 12. Review of status of the building programs, continued: FUND REQUIREMENTS, continued November 19, 1964. 5153 Project 1965-66 1966-67 1967-68 Utilities to Life Science Area Audiovisual Life Science Building Agricultural Engineering Addition Speech-Hearing Clinic $ 250,000 750,000 $ 630,000 250,000 1,431,500 $3,300,000 $2,311,500 $250,000 175,000 $425,000 AVAILABILITY OF FUNDS Out-of-State Fees Overhead General Fund $1,000,000 1,200,000 17100,000 $3,300,000 $1,000,000 1,311,500 $425,000 $2,311,500 $425,000 On motion by Mr. Stevens, seconded by Mr. Merriman, it was unanimously voted to approve this program in principle for the guidance of the officers of the University. 13. The President raised the question as to whether the Board of Trustees desired to take some formal action at this time to initiate action by the Governor and the Legislature to re-establish the Land Grant Endowment Fund in accordance with the action of the Legislature in 1862. mk\ On motion by Mr. Huff, seconded by Mr. as prepared by Attorney Carr: Bagwell, it, was voted to approve the following resolution Approval resolution to re-estab lish Land Grant Endow ment Fund Whereas, under date of July 2, 1862, the Congress of the United States undertook to provide for a fund to be maintained for the benefit of certain colleges throughout the nation where the leading object should be the teaching of branches of learning pertaining to agriculture and the mechanical arts. Specifically, Congress granted to each state maintaining such an institution thirty thousand acres of federal land for each senator and representative in Congress from such state in accordance with the census of 1860. Land grants received by a state accepting the act of Congress and receiving conveyances of lands thereunder, were authorized to be sold and the proceeds placed in a fund that might be invested in certain specified ways, the interest therefrom to be paid to the institution entitled thereto. It was made a condition of each such grant that the State should maintain a college qualifying therefor and that such college should be maintained, otherwise the grant would cease to exist with liability on the part of the state to pay to the United States the amount previously received for land sold. It was further required by the act of Congress that acceptance by a state entitled to the benefit of the fund contemplated by Congress should be.made within a specified time. In accordance with such requirement, the Leiglsature of the State of Michigan, by Public Act 46 for the year 1863, formally accepted the grant "in accordance with all the conditions and provisions" therein set forth. It clearly appears that the congressional action and the acceptance thereof by the State of Michigan pursuant to the grant contemplated the preservation of the fund received as a result of the sale of the land granted by the federal government and the continued payment of the interest thereon to the educational institution qualifying therefor. It is undisputed that this institution, now Michigan State University, did so qualify and hence was entitled to receive annually the interest from the fund created from land sales. It further appears that the receipts under the Land Grant Act, known as the Morrill Act, were not preserved in a special fund as contemplated by the act of Congress and that after the use of such fund for other purposes, payments were made to this institution from the Primary School Interest Fund. No action was taken by the state tp restore the special fund. The present Constitution of Michigan contains no reference to the educational fund from which payments have in recent years been made, and by Act 91 of 1964, the Primary School Fund, as such, was abolished. In consequence, it is the claim of state officials charged with the duty of making disbursements in accordance with the provisions of the Morrill Act and the acceptance thereof that there is no state fund from which paymentscan be made for the purposes of the Land Grant Act, and that current and future payments will, in consequence, be denied. It is the considered judgment of this Board of Trustees that the existing condition should be remedied and provision made by the state of Michigan on the basis of the existence of the fund required to be maintained under the provisions of the Morrill Act and its acceptance by the Legislature of this state. In view of the situation existing and the unfortunate results that may follow if the state refuses to act in accordance with the obligation assumed by it, steps should be taken to restdre Michigan to the position in which it was placed as a result of its acceptance of the land grants and the sale thereof for the account of the special fund contemplated by the Morrill Act, THEREFORE, BE IT RESOLVED that the attorney for Michigan State University be, and he hereby is, directed to call the present situation to the attention of the Governor of the state, the Attorney General thereof, and the State Legislature and to take such further action with reference thereto as may be deemed expedient to bring about the payment to Michigan State University of Interest payments to be devoted to the purposes contemplated by the Act of Congress in 1862. O X o4 I FINANCE COMMITTEE ITEMS, continued iOAKLAND UNIVERSITY ITEMS (Finance) November 19, 1964 9 sh Sears, Roebuck to be sold 1. Request from Mr. May that he be authorized to sell the 9 shares of Sears, Roebuck and Company stock reported as a gift to Oakland University. •| On motion by Mr. Bagwell, seconded by Mr. Merriman, it was voted to approve the sale of the above • stock. Up to 20 new -j teaching posi-2. Chancellor Varner recommended that he be authorized to allocate up to 20 additional teaching tions app. for Oakland positions for the 1965-66 year so that he may begin to recruit the required faculty to fill them. ! On motion by Mr. Huff, seconded by Mr. Merriman, it was voted to approve the above recommendations. | :3, Communication from Mr. May: Resolution approved re: | borrowing $900,000 for' .. | dormitory Oakland This afternoon I received a call from Mr. Cress that he is sending by special messenger copies of the resolution for the $900,000 loan at Oakland University. | •''•:! This resolution covers ;a 10-year loan in the principal amount of $900,000. The interest rate for the first year will be 3 3/4%. Beginning with the second year, the rate will be 3 1/4%. This difference in rate is to cover the loss which will be sustained by the bank in selling certain other MSU bonds to provide the necessary borrowing capacity. Mr. Cress and I recommend approval of the resolution authorizing the officers to execute loan agreements with the Community National Bank of Pontiac in the amount of $750,000 and the Ann Arbor Bank, Ann Arbor, Michigan, in the amount of $150,000. ' On motion by Mr. Nisbet, seconded by Mr. Harlan, it was voted to approve the following resolution: ! I | I RESOLUTION OF THE BOARD OF TRUSTEES OF MICHIGAN STATE UNIVERSITY AUTHORIZING A TERM BANK LOAN IN THE PRINCIPAL AMOUNT OF $900,000 FOR THE PURPOSE OF CONSTRUCTING A DORMITORY . AT OAKLAND UNIVERSITY. WHEREAS, the Board of Trustees of Michigan State University, a Corporation organized and existing under the Constitution of the State of Michigan and having general supervision and control of Oakland University a public educational institution of higher learning, located at Rochester, Michigan, in the exercise of its constitutional and statutory duties, has determined that it is necessary and expedient to borrow the sum of Nine Hundred Thousand Dollars ($900,000.00), and in evidence thereof to issue a Promissory Note or Notes for said principal amount, the proceeds of such Note or Notes to be used for the following purpose, to-wit: To construct, furnish and equip a new dormitory to provide housing and appurtenant facilities for approximately 200 students attending Oakland" University, which project is presently designated as "Student Residence. No. 5"; and WHEREAS Community National Bank of Pontiac, Pontiac, Michigan, has agreeed to loan the Board the sum of $750,000 and Ann Arbor Bank, of Ann Arbor, Michigan, has agreed to loan the Board the sum of $150,000, which loans are to be evidenced by the Promissory Note or Notes of this Board; which principal indebtedness from time to time owing on said Note or Notes shall bear interest at the rate of 3 3/4% per annum for the first year, and at the rate of 3 1/4% per annum for the following nine years; which principal indebtedness and accrued interest shall be payable in full on or before December 31, 1974; and which loan shall be subject to certain other terms and conditions set forth in the Note or Notes and in the Term Loan Agre ement to be entered into by the between this Board, Community National Bank of Pontiac, and Ann Arbor Trust Company, of Ann Arbor, Michigan, as Trustee. NOW, THEREFORE, BE IT RESOLVED that this Board accept the offer of Community National Bank of Pontiac and Ann Arbor Bank to loan the aggregate sum of $900,000 and to borrow said sum from said banks in the respective amounts of $750,000 and $150,000 to provide funds to be used to pay the costs of constructing, furnishing and equipping Student Residence No. 5 on the campus of Oakland University, said sum to be borrowed under the terms and conditions more specifically set forth in a Term Loan Agreement by and between this Board, Community National Bank of Pontiac, Ann Arbor Bank and AruiArbor Trust Company, as Trustee. BE IT FURTHER RESOLVED that any two of the following officers of Michigan State University, to wit, John A. Hannah, President, Philip J. May, Vice President, or Jack Breslin, Secretary, be and they are hereby authorized and directed for arri in the name of the Board to execute the necessary Term Loan Agreement and other instruments and documents necessary for the completion of this loan and the issuance of the Promissory Note or Notes of this Board after the approval of the form and content of said Agreement, Note and other necessary documents by legal counsel to the University. BE IT FURTHER RESOLVED that John A. Hannah, President of Michigan State University, or Philip J. May, its ;Vice President, is hereby authorized and directed for and in the name of the Board to execute said Note or Notes, and that Jack Breslin, Secretary of this Board is hereby authorized and directed to attest such execution. FINANCE COMMITTEE ITEMS, continued 3. Oakland University Dormitory Resolution continued: November 19, 1964 5JL55 BT IT FURTHER RESOLVED that the aforementioned officers be and they are hereby authorized and directed for and in the name of this Board, to deliver said Note or Notes to said banks, to borrow said sum aggregating $900,000, in accordance with the commitments of said Banks submitted by Ann Arbor Trust Company as Fiscal Agent for this Board, and said Ann Arbor Trust Company is authorized to accept the proceeds of said loan and to reimburse Oakland University for authorized expenses in connection with the construction, furnishing and equipping of the approved Student Residence as required. BE IT FURTHER RESOLVED that this loan, the terms of the Term Loan Agreement and the Promissory Note or Notes shall in no way pledge the credit of or create any liability on the part of the State of Michigan, the Board or any member of the Board, but shall be payable out of and secured solely by the pledge of Net Income as defined and specified in the.Term Loan Agreement. 4. Chancellor Varner recommended that Ralph Calder Associates be employed as architects for planning the next dormitory at Oakland University. On motion by Mr. Harlan, seconded by Mr. Nisbet, it was voted to approve the above recommenda tion. 5. Chancellor Varner reported that Jim Dickerson, who has been the Assistant to the Chancellor is resigning to accept a position as vice president of the Community National Bank. 6. Chancellor Varner reported to the Board that the income from the funds received from the Pryale Foundation have been used for the purchase of an electron microscope, a spectro photometer, and an ultracentrifuge instead of the Van de Graaf accelerator that was originally considered Adjourned. MINUTES OF THE MEETING of the BOARD OF TRUSTEES November 19, 1964 Ralph Calder Associates employed as. architects for dorm at Oakland Resignation Jim Dickerson Oakland Univ. Income from funds rec fd from Pryale Found used for electron micro spectrophoto- I meter and :ultracentri- j'fuge. Present: Dr. Smith, Chairman, Messrs. Bagwell, Harlan, Huff, Merriman, Nisbet, Stevens;- President Hannah, Treasurer May and Secretary Breslin, and by invitation of the Trustees, Mr. White, Trustee-elect. Mr. Hartman could not be present for the regular session. Absent: Mr. Pingel The meeting was called to order at 10:10 a.m. . - The Minutes of the October meeting were approved. SPECIAL MISCELLANEOUS 1. Approval of the Finance Committee items on the preceding pages. On motion by Mr. Bagwell, seconded by Mr. Merriman, it was voted to approve the Finance Committee items. . ' 2. The President reported that in view of the public interest in the developments