UM Regents: Entrepreneurs, Energy

University of Michigan Board of Regents meeting (Dec. 17, 2009): The December meeting of the UM Board of Regents was packed with presentations – on entrepreneurship, a new enrollment policy for Ph.D. students, and environmental sustainability efforts on campus.

Regents also approved the naming of the Von Voigtlander Women’s Hospital, reflecting a $15 million gift to the institution – part of the massive $754 million C.S. Mott Children’s Hospital and Women’s Hospital complex being built and expected to open in 2012.

The board signed off on several facilities projects, including interior work on offices at the former Pfizer site, now called the North Campus Research Complex (NCRC), as well as the next step in renovations of the Couzens Hall dormitory.

Also approved was a letter making UM’s annual operating request to the state, which laid out why legislators should appropriate funds to support the university in fiscal 2011. The letter, under the signature of UM president Mary Sue Coleman, did not request a specific dollar amount.

Coleman kicked off the meeting, as she typically does, with some opening remarks that led to news about plans to hold the April 2010 regents meeting in an unusual location: Grand Rapids.

Coleman: Kudos and Collaborations

In her introductory statement, UM president Mary Sue Coleman said it was a time of celebration for the 1,400 students graduating during winter commencement. Also worth celebrating, she said, was a licensing deal announced Dec. 16 between the pharmaceutical giant GlaxoSmithKline and NanoBio – an Ann Arbor firm founded by UM professor Jim Baker, who serves as its CEO. Research that led to the treatment for cold sores was developed at UM and is licensed to NanoBio, Coleman said, and demonstrates the value of university research.

Baker was also among 10 UM scientists who were recently elected as Fellows to the American Association for the Advancement of Science, Coleman said. He and others reflect the university’s rich heritage of innovators and entrepreneurs, she added, using that as a segue to highlight the work of UM’s Zell-Lurie Institute for Entrepreneurial Studies and MPowered Entrepreneurship, a campuswide student group. Representatives from both groups gave a presentation later in the meeting.

Coleman also expressed gratitude for the $15 million gift from the Ted and Jane Von Voigtlander Foundation for the women’s hospital, and to former UM football player Charles Woodson, who gave $2 million to the children’s hospital for pediatric research. The lobby of the hospital will be named in his honor when it opens in 2012, she said.

Finally, Coleman noted that she gave the commencement address at Grand Valley State University on Dec. 12, and that UM plans to work with that Grand Rapids-based institution on wind technology research. It’s an example of ways that UM is looking to collaborate with partners across the state, she said.

Regent and board chair Andy Richner then noted that because of the university’s growing partnerships in western Michigan, the regents would hold their April 2010 meeting in Grand Rapids. “We look forward to visiting the west side,” he said. A specific location for the meeting was not given.

Graduate Student Enrollment: Policy Change

Janet Weiss – dean of the Rackham Graduate School and vice provost for academic affairs-graduate studies – gave regents an update on a policy change affecting students enrolled in Ph.D. programs. The “continuous enrollment policy” requires that students enroll each semester until they complete their degree, unless they receive approval for a leave of absence.

Weiss told regents that the proposal is part of a strategy to help students complete their degrees with support from the university. Currently, about two-thirds of students in UM’s Ph.D. programs ultimately get their degrees. That’s better than the national average, Weiss said, “but we should be way better than the national average.”

The policy will help administrators better plan support services for the students, Weiss said, and make it easier for faculty to help students complete the program. “We don’t want students to fall between the cracks or to be left out of the loop,” she said.

The proposal has been controversial – at the April regents meeting, graduate students turned out to protest the change. Students charged that it was really a way to push them through the program, and they objected to the additional tuition that they felt they’d have to pay.

No one spoke during public comment at the Dec. 17 meeting, but Weiss told regents she knew they’d heard from students in April, and that she and all the other deans had been working to ensure that students wouldn’t bear additional tuition costs because of the new policy. The university could commit to tuition support for students who are making satisfactory progress toward their degree, she said.

The policy also allows for students to request authorized leaves of absence for health or family reasons. One of the concerns voiced by students in April was the fact that some students took time off to have children, for example, and they didn’t think the new policy would allow for that. Weiss told regents that the policy allowed for flexibility, and that a dispute resolution process would be set up so that students would have recourse for their concerns.

Returning to the issue of tuition, Weiss said that regents would be asked to approve a tuition reduction for Ph.D. candidates in June of 2010, when all tuition rates are set. To keep tuition costs flat, the plan is to lower the tuition rate but spread the cost over additional semesters. She described it as an important component of the overall policy, which she hopes to implement for the fall 2010 semester.

Responding to a question from regent Libby Maynard, Weiss described several others ways that students would be supported, including a faculty mentoring program and help to develop dissertation writing skills. Regent Denise Ilitch asked about the tone of the policy with respect to leaves of absence – would it be stringent and bureaucratic? Weiss pointed to drafts of the policy available online, and said there were four categories available: medical, family, military and personal. Students request permission from their graduate program adviser, who either recommends approval or not. The process is designed to be simple and quick, Weiss said, with recourse through the dispute resolution board.

Regent Julia Darlow asked if there were limits on the number of times a student could request a leave of absence. Weiss said only the personal leave category had a limit – students could use that one time.

With respect to tuition coverage, provost Teresa Sullivan said that her budget team had looked carefully at the numbers, and felt confident that it was financially viable.

Entrepreneurship at UM

To highlight the university’s entrepreneurial activities, two speakers gave presentations to the regents, starting with Tom Kinnear, executive director of the 10-year-old Zell-Lurie Institute for Entrepreneurial Studies at the Ross School of Business.

Kinnear began by saying he was “joined at the hip” with the other speaker, Thomas Zurbuchen, associate dean for entrepreneurial programs at the College of Engineering. Their approach, he said, was to “get people’s hands dirty” – meaning that they encouraged students to actually do the work of entrepreneurs. A large part of it is attitude, he said, including a willingness to take risks.

He cited several examples of that approach, most notably the Wolverine Venture Fund. With guidance from faculty and an advisory board, MBA students have made venture capital investments in over 18 companies since the $3.5 million fund was formed 11 years ago. One of those companies is NanoBio, Kinnear noted. “We were there before any of the big venture funds came in,” he said.

Most recently, the fund saw its biggest return – $2 million, from an investment in Ann Arbor-based HandyLab totaling $350,000 between 2000 and 2005. HandyLab, a UM spinoff, was acquired by New Jersey-based Becton, Dickinson and Company for an undisclosed amount in a deal announced in October 2009.

Kinnear also described the Zell-Lurie Institute’s role in the broader Michigan entrepreneurial community, as host of the long-running Michigan Growth Capital Symposium and the annual Entrepalooza, and the institute’s involvement with the Great Lakes Entrepreneur’s Quest, among other activities.

In handing off to Zurbuchen, Kinnear said the Zell-Lurie Insitute doesn’t work in isolation, and that a lot of collaboration happens with UM’s College of Engineering. He also noted that despite Michigan’s economy, “the world I live in, through this, is positive, growing, prosperous.”

Zurbuchen said he shared Kinnear’s optimism, and that entrepreneurial thinking spills out of the business school and across all the campus. It’s a supportive environment that wasn’t as strong 10 years ago, he maintained. [The full text of Zurbuchen's remarks are posted on his director's blog.]

Zurbuchen cited the MPowered 1,000 Pitches program as a way that the entire campus community was engaged in entrepreneurial thinking. This was the program’s second year, and 2,165 ideas for business ventures were submitted by students across campus.

Several challenges remain in order to make entrepreneurial thinking a core part of the engineering curriculum and of the entire campus, Zurbuchen concluded. The transformation requires help from all corners – he said he hoped that regents would do everything in their power to make it a success.

Several regents had comments and questions following the presentation. Regent Kathy White said she’d seen Zurbuchen and some of his students featured on a recent PBS Newshour report, and that it was exciting to see him helping get the word out about the entrepreneurial activity here. She invited him to tell the regents what they could do to help.

Libby Maynard said it was important to integrate that attitude into all of the curriculum, not just business and engineering. Andy Richner asked what could be done to keep more UM graduates – those who had this entrepreneurial mindset – from leaving the state.

Zurbuchen said that placing students in internships with local companies was an effective way to make connections with the local business community. Those internships can turn into jobs, he said.

Kinnear added that supporting Michigan’s economy was one reason why the Zell-Lurie Institute is involved in so many statewide initiatives and organizations, like the Michigan Venture Capital Association. [Kinnear is vice chairman of that Ann Arbor-based group.] He said the five biggest venture funds in the state – Ardesta, EDF Ventures, Arboretum Ventures, Dow Venture Capital and the Wolverine Venture Fund – are all controlled by UM graduates. He said the university can’t thrive without the infrastructure around it, and that they’re a long way from declaring success on that front. “We’re pushing the boulder up the hill a little,” he said.

Environmental Sustainability

Terry Alexander, executive director of the university’s office of campus sustainability, briefed regents on the new environmental sustainability initiative. His role is to coordinate operational aspects of the effort, working with UM’s Graham Environmental Sustainability Institute, which focuses on academics. The goal, he said, is to turn the campus into a living-learning lab for improving the environment.

Alexander reviewed key points of the initiative: 1) the 2009 Environmental Report, 2) renewable energy, 3) alternative transportation, 4) green purchasing and recycling, 5) new construction and renovation projects, and 6) the Planet Blue program.

Environmental Report: Noting that the full 2009 report was online, Alexander hit on a few highlights. Per capita water use was down 7.1% in 2009, compared to 2004. Energy use had remained flat, despite an additional 11% increase in gross square footage on campus during that period, and a 9% increase in the campus population compared to 2004. Normalized for those factors, he said, energy use was down 19% (measured by British thermal units, or BTUs). Greenhouse gas emissions were also flat, at around 600,000 metric tons of carbon dioxide equivalent. While it was good that energy usage and greenhouse gas emissions hadn’t increased, he said, “holding steady is not going to be adequate going into the future.” [.PDF file of 2009 Environmental Report]

Renewable Energy: This was an area that hadn’t made great strides, Alexander said. He pointed to the Dana Building’s photovoltaic array project, and the central power plant’s hot water solar array as two examples of efforts toward generating renewable energy on campus.

Alternative Transportation: Use of alternative transportation was up 28% compared to 2004, Alexander said. Ridership on the UM bus system surpassed 6 million during 2009, while the MRide program – which allows UM-affiliated riders to use the AATA system at no cost to them – had over 2.4 million riders. More than 3,000 people have signed up to use the GreenRide program, Alexander said, a system to help people find others interested in using carpools or vanpools. There are 86 UM vanpools, he reported, used by 527 people.

Green Purchasing/Recycling: The university’s recycling rate is at 33%, Alexander said, up from 29% in 2004. A toner cartridge recycling program is just starting, he said, with the expectation of saving about $2 million over the next year. One of their biggest recycling programs is during student move-out dates, when university staff helps divert items – things that would otherwise be left behind and thrown out – to local nonprofits. Over the life of that program, they’ve diverted an estimated 138 tons of usable items, he said.

New Construction/Renovation: This year, the university adopted a new goal for its design standards, aiming to go 30% beyond the 2007 energy efficiency standards set by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE). Alexander cited the example of the North Quad dormitory being built at the corner of Huron and State – by using energy efficient design, the university hopes to save $300,000 in annual utility costs.

Planet Blue: The Planet Blue initiative is a building-by-building approach, Alexander said, with operations staff working with each building’s occupants to find ways to reduce energy. Five buildings – including the Fleming administration building, Chemistry and Rackham – have completed the program, showing a 6% reduction in energy use and an annualized cost avoidance of $340,000. Thirty more buildings are involved in Planet Blue this year, and another 30 will be targeted in 2010. Alexander said he thinks the 6% energy reduction will grow to 15-20% when these other buildings complete the program.

Alexander told regents that compared to other schools in the Big 10, UM was a leader in sustainability efforts. Looking ahead, he said, the key will be to balance environmental and economic goals.

Gift for Women’s Hospital

Regents unanimously approved the naming of the new women’s hospital as the University of Michigan Von Voigtlander Women’s Hospital – reflecting a $15 million gift to the hospital from the Ted and Jane Von Voigtlander Foundation. Ted Von Voigtlander was a co-founder of the Discount Tire chain.

Ora Hirsch Pescovitz, UM’s executive vice president for medical affairs, thanked the staff who’d been instrumental in securing the gift, including Pat Warner, Jennifer Edwards, Tamara Carr and Tim Johnson. They were attending the meeting and received a round of applause from the regents. Pescovitz also thanked Gwen Haggerty, president of the foundation, daughter of the Jane Von Voigtlander and adopted daughter of Ted Von Voigtlander. Both of the Von Voigtlanders are deceased.

Regent Andrea Fischer Newman, who participated in the meeting by phone, made the motion to approve this resolution. She noted that it was almost 14 years ago that she spent a few days under the care of Johnson, “and I have a 13-year-old to prove it,” she quipped. Johnson is currently chair of obstetrics and gynecology at the UM Medical School. Newman said she remembered talking to him about his goals for women’s health programs at the university hospital, and that she knew how much this gift would mean toward achieving those goals.

A $754 million C.S. Mott Children’s Hospital and Women’s Hospital complex is being built on the university’s medical campus, and is scheduled to open in 2012.

Building Projects

Regents approved several facilities projects for the Ann Arbor campus:

• A $1.8 million remodel of about 92,000 square feet of office space in four buildings at the North Campus Research Complex (NCRC), formerly the Pfizer campus. The job includes painting and new carpet installation, as well as improving the site’s accessibility. When renovations are finished, the university plans to move administrative staff into the NCRC offices, vacating other space that it currently leases.
• The next step in the $49 million renovation of the Couzens Hall dormitory on East Ann Street, which houses about 560 students – authorizing the project to be put out for bids, and authorizing the awarding of construction contracts. At their July 2009 meeting, regents approved the schematic design for the dorm renovation, which UM chief financial officer Tim Slottow previously characterized as the last “deep” renovation of a heritage residence hall.
• An $11.1 million renovation and expansion project on the second floor of the Michigan Memorial Phoenix Laboratory building, which houses the Michigan Memorial Phoenix Energy Institute. The architectural firm of Lord, Aeck & Sargent Inc. will design the project. It includes renovating 10,000 square feet of research space and building another 10,000 square feet for administrative use.

Lease Report

The university’s real estate policy requires that an annual report be given to the regents with information about leases exceeding 50,000 square feet at any given location. The current report lists five such places – no dollar amounts were given regarding the cost of these leases.

• 229,550 square feet at the Domino’s Farms complex, leased from Domino’s Farms for use by various University of Michigan Health System (UMHS) departments, including sports medicine, plastic surgery, preventive cardiology, and various Medical School groups, including internal medicine.
• 125,815 square feet at the KMS Building on 3621 S. State St., leased from Kosmos Associates for hospital clinical billing and other UMHS groups.
• 63,920 square feet at 2301 Commonwealth Blvd., leased from First Properties Associates for use by various UMHS groups.
• 59,219 square feet at 325 E. Eisenhower Parkway, leased from Burlington Property LLC for use by physical medicine and rehabilitation, spine rehabilitation, and the Dental School.
• 51,534 square feet at 1051 N. Canton Center Road in Canton, leased from Saltz Center for the UMHS Canton Health Center.

Conflict of Interest Items

Regents approved 10 items that required disclosure under the state’s Conflict of Interest statute. They involved deals with the following nine companies: McCreadie Group Inc., Fusion Cooolant Systems Inc., ChemXLerate LLC, NanoBio Corp., NeuroNexus Technologies Inc., Incept BioSystems, ACSI LLC, Arbor Photonics Inc. and 3D Biomatrix Inc.

Regent Larry Deitch, an attorney, recused himself without elaboration from voting on a master sub-recipient agreement between the university and NanoBio Corp. – the company led by Jim Baker that was cited in UM president Mary Sue Coleman’s opening remarks.

Annual Operating Request to the State

Regents approved but did not discuss annual operating requests made to the state legislature for the Ann Arbor, Flint and Dearborn campuses for fiscal 2011, which begins July 1, 2010. [.PDF file of request made for the Ann Arbor campus]

The requests came in the form of a letter from UM president Mary Sue Coleman to state budget director Robert Emerson. No specific dollar amount was mentioned. Rather, the letter made a case for why it was important for the state to maintain adequate funding for the university. The letter states, in part:

We acknowledge the financial circumstances of the State. Nevertheless, the University of Michigan is an essential component in the stabilization and revitalization of the Michigan economy. We also play a critical role in the development and education of our workforce and cannot risk jeopardizing the quality of our instruction, research and service. Our current state appropriation is $47 million less, in nominal dollars, than the appropriation we received in fiscal 2002. At the same time, our activity levels have grown, and the competition we face for the best students and faculty has increased.

Maintaining our position as one of the most prestigious educational and research institutions in the world is one of our top goals, and it is critical to our ability to continue supporting the State’s economic recovery. The impact of the State’s historic contributions to the University of Michigan’s success cannot by overstated, and we believe the State’s continued investment in our success is central to our collective future.

UM’s Ann Arbor campus received a state appropriation of $316.6 million for its current fiscal year, plus $8.78 million in one-time funding.

Present: Mary Sue Coleman (ex officio), Julia Darlow, Larry Deitch, Denise Ilitch, Olivia Maynard, Andrea Fischer Newman (via phone), Andy Richner, Martin Taylor, Kathy White

Next board meeting: Thursday, Jan. 21 at 3 p.m. in the Fleming Administration Building, 503 Thompson St., Ann Arbor. [confirm date]