UM Regents Skate Through Agenda

University of Michigan Board of Regents meeting (March 18, 2010): Thursday’s meeting was a routine, relatively brief session – punctuated rather dramatically by the arrival of four Olympic ice dancers, who turned the regents, as one of them observed, into “total groupies.”

During the less rambunctious portions of the meeting, regents approved two building renovations – at the Duderstadt Center and Lorch Hall – totaling $3.8 million. They also authorized the awarding of six honorary degrees at the May 1 commencement ceremony, including one to the keynote speaker, President Barack Obama.

The main presentation of the afternoon came from Laurita Thomas, associate vice president for human resources, who updated regents on the status of employee benefits.

At the end of the meeting, one person spoke during public commentary. Ann Arbor resident Rita Mitchell urged regents not to proceed with the Fuller Road Station project, a joint UM/city of Ann Arbor parking structure and transit center planned on city-owned land near the university’s medical campus. She argued that the project violated both the spirit and intent of a city charter amendment passed in 2008, which requires voters to approve the sale of city parkland.

Thursday’s meeting was in its usual location – the boardroom in the Fleming administration building, on Thompson Street. UM president Mary Sue Coleman reminded regents that next month’s meeting will be held in a different venue: the city of Grand Rapids.

U.S. Olympians: “Proud Wolverines”

During her opening remarks, UM president Mary Sue Coleman alerted regents and others in the room that they’d be joined later in the meeting by the four UM students who had competed in the winter Olympics. Meryl Davis, Charlie White, Emily Samuelson and Evan Bates were on their way over after finishing practice, she said, in preparation for the upcoming World Figure Skating Championships, held March 20-29 in Torino, Italy.

Several minutes later, as Laurita Thomas – UM associate vice president for human resources – was wrapping up a presentation on employee benefits, the four Olympians quietly slipped into the room, taking seats that had been reserved for them behind the board table. They listened politely as Thomas concluded her description of health plan aggregate cost sharing and retiree contribution levels.

But as soon as Thomas was done, Coleman introduced the skaters and they stood up to a round of applause. Coleman told them that they’d not only represented the United States well, but also “the maize and blue.” She added: “You just did us all proud.”

Regent Andrea Fischer Newman went up to the podium to read the text from a certificate of recognition that each of the skaters received. She said that as soon as she had received an email announcing that they’d be coming to Thursday’s meeting, she had immediately emailed back, asking if she could make the presentation. “That’s the science behind getting to do this,” she joked. After Newman read the text of the certificate, regents and university staff gave the students a standing ovation.

The four Olympians spoke briefly. Meryl Davis thanked the regents for  the recognition. Her partner and fellow silver medalist, Charlie White, explained his choice of sport: “At a young age, I knew I probably wasn’t going to make the football team,” he quipped. He noted that they were among the very few figure skaters who went to college, and they were proud of that.

Evan Bates said he was born and raised in Ann Arbor, and has always been a huge Michigan fan. “We do take the block M wherever we go,” he said. Emily Samuelson, who partnered with Bates to place 11th in the ice dancing competition, said they’d received incredible support from the entire campus: “We’re proud to be Wolverines!”

Regents then took a 15-minute recess from their meeting to talk with the students, take photos and try on their medals. “It’s the nicest piece of jewelry I’ve ever seen,” Denise Ilitch said.

HR Benefits Update

Earlier in the meeting, Laurita Thomas gave regents an update on the university’s employee and retiree benefits. UM president Mary Sue Coleman introduced her by noting that she’d been with the university for 38 years, and knows every facet of its human resources operation.

For fiscal 2010, the university will contribute a projected $554.4 million toward its benefits plans, Thomas said. That includes $297.35 million for employee health benefits covering 89,140 people. That amount is growing, she said.

Rate increases, compared to national trends, have been kept relatively low, she said. That’s due to several factors, including a decision to handle their prescription drug program internally, and the sale of M-Care, as the university moved to become self-insured – a change saved about $15 million annually.

The university also has seen an increase in the rate of generic drugs that are used – from 46% in 2003 to more than 70% last year. Each percentage increase in that rate decreases drug expenses for the university by $450,000, Thomas said.

UM is also keeping costs down by increasing the amount that its employees pay. Over the next two years, the university is gradually implementing a 70% (UM)/30% (employee) cost-sharing split, compared to a previous 80%/20% split for health care premiums and co-pays. The change is expected to save the university $31.3 million annually by 2011. Thomas noted that UM is using a salary index to calculate payments, meaning that employees on the lower end of the pay scale are paying less.

Other benefit changes include a modified retirement savings plan, which now requires a one-year waiting period before starting the 10% university match for faculty and staff retirement contributions. That change will save the university $8.3 million this year, and $11 million annually in 2011 and beyond.

Thomas reported that a committee was appointed in January to review retirement health benefits. They’ll be looking at ways to reduce costs, which at this point far exceed the market, she said. The committee will be making recommendations to benefit changes, as well as suggestions for how to implement those changes.

Looking ahead, Thomas said that employees will likely be asked to pay different rates for their health care, depending on what they do to reduce their risk factors. Incentives could be lower rates for premiums and co-pays.

Thomas also indicated that the university will be issuing requests for proposals (RFPs) for most benefits they offer, in order to secure more favorable contracts with vendors.

After her presentation, Coleman and several regents praised Thomas for her work. Coleman said that in addition to controlling costs, the university was also finding ways to encourage its employees to be healthier.

Olivia Maynard recalled that previously when benefits changed, she and other regents were inundated with complaints. This time, she didn’t receive any emails or phone calls: “That says it’s working.” Andrea Fischer Newman joked that they were not suggesting they wanted more emails.

Thomas credited the university’s union leadership, saying that six of the seven unions agreed to the changes in benefits because they understood it was in the best interests of their members.

Tim Slottow, UM’s chief financial officer, wrapped up the presentation by recognizing Marty Eichstadt, UM’s director of benefits, who also attended Thursday’s meeting. He noted that she’ll be retiring in June, and thanked her for her leadership.

Honorary Degrees

UM president Mary Sue Coleman read through a list of six people who’ll be receiving honorary degrees at the university’s May 1 commencement ceremony. They are:

• Jean Campbell, founder of the Center for the Education of Women
• Ornette Coleman, a jazz musician
• Barack Obama, current U.S. president
• Stanford Ovshinsky, president of Ovshinsky Innovation
• Susan Stamberg, a public radio journalist
• Charles Vest, president of the National Academy of Engineering

“We’re very excited about all of them,” Coleman said. Regents approved the awarding of the degrees, without comment.

Building Projects: Sealing Up “The Dude”

Regents approved two building projects, at the James and Anne Duderstadt Center and at Lorch Hall.

A $2.2 million project at the Duderstadt Center, located on UM’s north campus, will deal with the underlying cause of damage to soffits in the building that have been weakened by air infiltration and water condensation. Unless the problem is addressed, the soffits are at risk of falling off the building, according to a memo on the project.

In discussing the project, Tim Slottow – the university’s chief financial officer – described it as “basically to seal up The Dude.” Workers will install a vapor barrier and air barrier, add thermal insulation and upgrade the building’s mechanical systems.

Regent Larry Deitch wondered why the work needed to be done on a building that’s “relatively new.” Hank Baier, associate vice president for facilities and operations, said that though they think of it as new, it was built in 1995.

There was no question about the age of Lorch Hall, which was built in 1928. Regents authorized a $1.6 million project to do masonry and steel repairs, roofing repairs, and repair of damaged rain conductors. The building, at 611 Tappan, houses the departments of economics and linguistics.

Other Misc. Reports and Actions

Thirteen items required regental approval because of potential conflict-of-interest issues – all were approved in one vote, with no discussion. The majority related to contracts that in some way involved university employees. One item involved the purchase by the university of a piece of multi-media artwork created by UM faculty member James Cogswell Jr. – the work will be displayed at the Ross School of Business.

In a slight departure from the norm, the board’s finance, audit and investment committee report was given by regent Olivia Maynard, rather than the committee’s chair, Katherine White. Maynard noted that White had to miss the meeting because she was performing her civic duty – sitting on the city of Ann Arbor’s board of review. [The Chronicle covered a board of review meeting in 2009 on which White's father, Robert White, served.]

Thursday’s meeting was the final one for Michigan Student Assembly president Abhishek Mahanti, who noted that MSA elections will be held within the next month. However, he said he plans to attend the board’s next meeting in Grand Rapids, to introduce his successor. He received a round of applause from regents at the conclusion of his remarks.

Public Commentary

Ann Arbor resident Rita Mitchell was the only speaker during public commentary. She discussed the Fuller Road Station, a joint project between the university and the city of Ann Arbor. [James d'Amour, who also lives in Ann Arbor, had attended the regents' January meeting and spoke on the same subject.]

Mitchell noted that in 2008, city voters had overwhelmingly approved a charter amendment requiring that the city get voter approval before selling parkland. By building a parking structure on city-owned land that’s designated as parkland, the project will irreversibly re-purpose that land without voter approval, she argued.

Mitchell acknowledged that the university has leased the site for several years, but said that a parking lot is reversible construction, while a structure is not. She also argued that the university’s payments to the city will be lower for Fuller Road Station than they have been to lease the surface parking lot – it’s a “gross undervaluing of the land,” she said.

Her main concern, however, was that the project would set a precedent for re-purposing parkland. It was coming at a time when city officials are saying they anticipate a $5 million deficit and budget cuts, she said, yet the city will be paying more than $14 million for the project, plus 22% of future operating costs. “I am seriously concerned with an arrangement for a project that would jeopardize the financial health of the city which hosts the university,” Mitchell said. “Our mayor told us that he does not yet know the source of the city’s funds for the project.”

She also questioned whether a later phase of the project – a train station for commuter and high-speed rail – will ever materialize. What’s more, she said, the project runs counter to the university’s sustainability efforts, as it will pollute the air, water and night-time light.

Mitchell offered four options as alternatives to the Fuller Road project: 1) use university-owned land for parking, 2) pay fair-market value for the land, 3) take a public vote on whether to sell the land, before re-purposing it, and 4) work with university engineers and experts to reduce the overall need for parking.

As part of her presentation, Mitchell gave regents a handout showing two photos of the site, at night and during the day, and asked them to imagine it with a large parking structure in place. The handout reads: “Fuller Park: Is it a noun or a verb?”

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

Next board meeting: Thursday, April 15 in Grand Rapids [details to come]. The meeting begins at 1:30 p.m. at the Amway Grand Plaza Hotel, 187 Monroe Avenue Northwest, Grand Rapids.