North Dakota Board of Higher Education - North Dakota University ...

1 State Capitol – 600 E Boulevard Ave – Dept. 215 Bismarck ND 58505-0230 Phone: 701.328.2960 Fax: 701.328.2961 E-mail: [email protected] Web: ndus.edu

North Dakota Board of Higher Education Meeting Notice and Agenda March 27, 2014 The State Board of Higher Education meeting on Thursday, March 27, 2014 will begin at 9:00 a.m. CT at Bismarck State College, National Energy Center of Excellence, Room 335, 1500 Edwards Avenue, Bismarck, ND. The live video stream can be viewed at http://ndus.edu/board/live-stream/. Call to Order 1. Approval of February 27, 2014 meeting minutes 2. Approval of Agenda Reports and Public Comment 3. Board Chair’s Report – Board Chair Diederich 4. Interim Chancellor’s Report – Interim Chancellor Skogen • Briefing on Server Breach – Dr. Feldner • Institutional Initiatives – Report on TrainND Summit – Ms. Carla Hixson, BSC, Associate Vice President of Continuing Education and Training • Update on Higher Learning Commission Visit 5. North Dakota Student Association Report – Jennifer Vetter 6. Council of College Faculties (CCF) Report – Dr. Douglas Munski 7. Staff Senate Report – Ms. Janice Hoffarth 8. State Board of Higher Education Committee Reports • Academic and Student Affairs – Board Chair Diederich • Budget and Finance – Mr. Espegard 9. Public Comment Board Business 10. Approval of SBHE Meeting revisions: • SBHE Retreat, July 30 and 31, 2014, venue change, from Lake Metigoshe to Bismarck • May 29, 2014 venue change, from MiSU to Tioga, ND. 11. Approve 2014-15 Annual Budget Guidelines, including tuition and fee rates – Ms. Glatt 12. Approve NDSU and Sanford College of Nursing – President Bresciani 13. Approve Honorary Degrees 14. Selection of a board member to chair the VCSU Presidential Search and delegation of authority to select the consulting agency to Interim Chancellor Skogen Financial and Facility Consent Agenda 15. Authorize NDSU to proceed with construction of a new shop at Carrington Research Extension Center (CREC) in the amount of $350,000 to be funded from local funds. The North Dakota University System is governed by the State Board of Higher Education and includes: Bismarck State College • Dakota College at Bottineau • Dickinson State University • Lake Region State College • Mayville State University • Minot State University North Dakota State College of Science • North Dakota State University • University of North Dakota • Valley City State University • Williston State College

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16. Authorize UND an increase for general renovation work and mechanical upgrades to the existing Upson I building from $500,000 to an estimated cost of $600,000, with funding from 11-13 state appropriated extraordinary repair funding. 17. Authorize UND to proceed with renovations in the School of Medicine and Health Sciences (SOMHS) to provide more open collaborative genomics research wet laboratories, create a new bioinformatics laboratory and group associated support and office spaces at an estimated cost of $600,000 funded by $300,000 grant and $300,000 in UND tuition income. Further, request authorization to seek approval from the budget section per NDCC 15-10-12.1. 18. Authorize UND to proceed with ADA compliance renovations to the entrance of McVey Hall at an estimated cost of $600,000 to be funded with local funds. 19. Authorize UND to proceed with installation of fire protection systems in Johnstone Hall, a residence hall facility, at an estimated cost of $1,500,000 to be funded from local funds. 20. Authorize NDSU to proceed with the reconstruction of parking lots at an estimated cost of $2,000,000 to be funded from Parking Office local funds. 21. Authorize the North Dakota State College of Science to proceed with the Heating Plant DA tank replacement project estimated to cost $300,000 from 13-15 deferred maintenance funding. 22. Authorize Williston State College to extend by 2 years the term of the previously approved ground lease agreement with the WSC Foundation to enable the construction by the Foundation, or other private entity, of apartment units on the WSC campus to provide housing for WSC employees and employees of other state and local government entities and local hospital and clinic employees. The 2 year extension of the lease is necessary to facilitate the Foundation’s financing of the apartment building construction. 23. Approve WSC of Covenant of Dedication, Use and Ownership, required by U.S. Corps of Engineers. 24. Ratify Chancellor’s interim action authorizing VCSU to proceed with the Historic President’s House – ADA Upgrades at an estimated cost of $450,000, funded $250,000 in 13-15 capital assets funding and $200,000 in private funding. Academic Consent Agenda 25. Stage II Academic Requests Program Terminations • MiSU-Request for termination of the B.S.E. with a MiSU-Request for termination at the BSC Campus; effective immediately. •

DCB-Request for termination of the Medical Transcription Program; effective Fall 2014.

Organizational Change • DSU-Organizational Change by merging the Department of Music and Department of Fine and Preforming Arts ; effective Fall 2014 Board Policy 26. First Reading (None) 27. Second Reading •

SBHE Policy 802.8 – Internal Audit Charter – Board Chair Diederich

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SBHE Policy 810.1 – Appropriated Reserve Funds – Ms. Glatt

Under Review o SBHE Policy 430.1 – Honorary Degrees (Amend) o SBHE Policy 611.2 – Intellectual property (Amend) o SBHE Policy 611.10 – Employee Responsibility and Activities: Theft, Fraud, Abuse and Waste (Amend) o SBHE Policy 340.2 – Foundations (Amend) Other Business 28. Presidents’ Reports Adjourn Future Board Meetings • April 24, 2014 – Dickinson State University • May 29, 2014 – Tioga, ND Contact Kristie Hetzler (701) 328-2966 or [email protected] prior to the scheduled meeting date if auxiliary aids or services are needed.

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Summary of Proposed Action SBHE Meeting – March 27, 2014 1. Issue: Approve fiscal year 2015 annual budget guidelines, including tuition and fee rates for academic year 2014-15. 2. Proposed motion: The SBHE Budget and Finance Committee recommends approval of the 2014-15 annual budget guidelines as presented, including the following: • 2014-15 salary guideline that provides for a campus/entity-wide average salary increases of a minimum of 3% for permanent employees beginning with the month of July 2014, unless an exception is provided by the SBHE. • Carryover authority and reporting requirement • 2014-15 maximum tuition rate increases, with authority delegated to the campus president to set the final rate, not to exceed the maximum rate as follows: Column (1) Campus BSC LRSC WSC NDSCS DCB DSU MaSU MiSU VCSU UND/SMHS NDSU • • •

Column (2) Proposed 2014-15 Maximum Tuition Rate Incr. 2.42% 2.18% 7.10% 3.76% 3.30% 3.97% 3.79% 3.62% 4.23% 3.72% 3.28%

Approve 7.1% tuition rate increase limit for WSC in FY15, under a two-year plan to increase WSC’s per credit hour tuition rate from $100.68 to $115 over a two-year period. 2014-15 ConnectND fee of $66 per semester, a reduction of $15 per semester. Approve exemption from statutory 1% mandatory fee limitation at WSC for new $120 per year ($5 per credit hour, capped at 12 semester hours) Recreation Center Fee.

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Provide the Chancellor the authority to approve the annual budgets within the guidelines set forth by the Board; however, any line item transfers from operations to capital assets line item must be approved by the Board.

3. Background: Each year, NDUS entities prepare an all funds fiscal year budget plan, covering appropriated funds, grants and contracts, auxiliaries, and all other sources of revenues. The SBHE sets broad budget policy guidance at the outset, while allowing campuses to prepare the operational details consistent with the guidelines and institutional priorities.

Consistent with past practice, the guidelines establish the annual salary policy, areas of strategic investment, and tuition and fees for the period July 1, 2014 to June 30, 2015.

The 2013 Legislative Assembly provided funding for employee salary increases of 4% in FY14 and 3% in FY15. Consistent with the appropriation, the guidelines recommend a minimum average campus/entity-wide salary increase of three percent in FY15, permitting campuses to go beyond three percent through internal reallocation or through the use of additional revenues which can be self-sustained in future periods.

The guidelines called for continued strategic investments in improving student retention and graduation rates, as defined by each institution.

The SBHE Budget and Finance Committee recommends maximum tuition rate limits to cover some or all of the annual cost of the student share of the cost to continue (CTC). The CTC includes salary and benefit increases for the new biennium, continuation of second-year salary increases for the previous biennium, operating inflation, utilities increases, and in 13-15 security and student mental health services. Campuses would have the ability to set the final tuition rate increase, as long as it does not exceed the approved limit or cap.

The Chancellor’s Cabinet recommends maximum tuition rate limits to cover some or all of the annual cost of the student share, plus the unfunded state share of the CTC. This recommendation is based on proposed maximum tuition rate increases consistent with the final 13-15 legislative appropriation which: • was based on the Governor’s new funding model, which assumes state/student shares of: UND/NDSU 60/40%; four-year 70/30%; and, two-year 75/25%; • included a student cost share for the cost to continue of: UND/NDSU 40%; four year 30%; and, two-year 25%), and; • did not fully fund the state share of the cost to continue by about $7 million for the 13-15 biennium. Column (1)

Column (2)

Column (3)

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Campus BSC LRSC WSC NDSCS DCB DSU MaSU MiSU VCSU UND/SMHS NDSU

CABINET Proposed 2014-15 Maximum Rate Incr. 3.81% 2.13 7.1 3.28 2.42 5.08 3.57 5.09 4.16 4.90 4.23

BFC Proposed 2014-15 Maximum Rate Incr. 2.42% 2.18 7.1 3.76 3.30 3.97 3.79 3.62 4.23 3.72 3.28

Further, approve an increase in tuition at WSC from $100.68 to $107.84 in FY15, as part of a two-year plan to increase WSC tuition to $115 per credit hour over a two year period. This adjustment is intended to align WSC’s tuition rates closer to other NDUS two-year campuses, and permit a more seamless implementation of Pathways Plan changes. Approve a reduction in the ConnectND fee of $81 per semester to $66 per semester or $15 beginning in the Fall 2014 semester. The fee will be reduced, in part, because the final payment was made on the bonds that helped finance CND costs. The resulting reduction could have been $23; however, there are offsetting ongoing personnel and software license/maintenance costs that support the CND system. Those cost increases, which are roughly equivalent to $8 per student, have been factored into the AY14-15 CND fee, thus the net reduction will be $15.

4. Financial implications: Tuition costs increase as the higher education funding model recognizes an inherent increase in student costs through the student share component as expenses increase for salaries and operating costs. Furthermore, room and board rates will similarly increase to absorb salary, benefit and operating costs increases in these self-supporting operations. Mandatory fees, for student government and college/university fees will also increase at all campuses from $30 to $120 annually, except at BSC, LRSC, MaSU and VCSU in

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2014-15. According to SBHE policy 805.2, campus presidents have authority to approve increases in these fees, with student input or support. In all cases, the representative student groups have been consulted and support the mandatory fee increases.

5. Academic implications: none 6. Legal/policy issues: none

7. Review Process: Administrative Affairs Council, February 4, 2014 Chancellor’s Cabinet, February 12, 2014, March 17, 2014 SBHE Budget and Finance Committee, March 7, 2014

8. Enclosures: FY15 Annual Budget Guidelines

9. Contact person: Laura Glatt, [email protected], 701-328-4116

10. Chancellor’s Recommendation: Support BFC recommendation, except as it relates to tuition rate limits. For tuition rate limits, support the Cabinet proposed plan which is consistent with the new state funding model. Most of the presidents have indicated an intent not to increase rates to the maximum limits provided, but would like to have that option if necessary. This underscores our commitment to serving our students while keeping with the spirit of the funding model. g:\laura\docswp\annbud\fy15 annual budget\summary document sbhe annual budget guidelines bfc rec, final.docx

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Summary of Proposed Action SBHE Meeting - March 27, 2014

1. Issue. The arrangement between NDSU and Sanford College of Nursing. 2. Proposed motion. Motion to approve integration of Sanford College of Nursing into North Dakota State University, with specific approval of the March 7, 2014, Asset Transfer Agreement and Lease Agreement between North Dakota State University and Sanford Bismarck. 3. Background information. On November 8, 2013, Sanford Bismarck signed a memorandum of understanding with NDSU to discuss a partnership for nursing education. Talks of a partnership began in response to a new Higher Learning Commission (HLC) requirement that all colleges should become separately incorporated in order to retain their accreditation. One HLC recommendation was that the Sanford College of Nursing (the “College”) explore possible partnerships as an option to keep accreditation and funding support. Subsequently, NDSU and Sanford Bismarck negotiated an Asset Transfer Agreement. In this agreement, NDSU agrees to incorporate the College into the NDSU Department of Nursing and to acquire all of the assets of the College. The agreement was approved by the Sanford Bismarck Board of Directors on March 6, 2014, and has been signed by both parties. The agreement is contingent upon the approval of the SBHE. If the SBHE approves the transaction, the transfer is scheduled to occur on June 30, 2014. Following the change of control, Sanford College of Nursing will cease to exist as a separate institution and will resign its separate accredited status with the HLC. The College would be owned, operated, and managed solely by NDSU under the name NDSU Nursing at Sanford Health. The College will be operated at its current location in Bismarck, ND, but it will be integrated into NDSU's Department of Nursing and adopt its mission, curriculum, assessment, and policies. All currently enrolled sophomore and junior students will continue their education at the College and transition into the NDSU program as of fall 2014. Current senior students will graduate in spring 2014 from the College. All faculty and staff currently employed by the College at the time of the transfer will become NDSU employees. College faculty

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will transition to positions within NDSU’s Department of Nursing with their years of service at Sanford being honored. The College budget will be part of the NDSU budget. The enclosed five-year budget projection has been developed to show new estimated NDSU revenues and expenses for this project. Revenues are based on projected enrollments and associated tuition/fees. Expenses are based on NDSU’s anticipated needs for faculty salaries, staff salaries, program, operating, and facility costs including equipment costs. In the Five Year Financial Plan, tuition rates for Fiscal 2014-15 were estimated based on a 3.28% tuition increase. Each year beyond Fiscal 2014-15 a 3.00% tuition increase was assumed. Student fee rates for Fiscal 2014-15 were estimated based on an assumed 5.00% increase each year. Certain components of the overall Student Fee rate were estimated at $0, because at the time of the forecast it was unclear whether they would be applicable. But since then, based on further analysis considering the Pathways model, it was decided to charge all of the Student Fee components to all students. For purposes of the Financial Plan, since Student Fee revenues are accounted for separately in local funds, the revenues are offset by expenses so they have no effect on the bottom line. Tuition & Fees will go down an estimated annual $3,043 per FTE student in Fiscal 2014-15. No student impact is anticipated due to Sanford’s Loan Forgiveness program or scholarship programs, as those are expected to continue according to the Asset Transfer Agreement. There may be other minor differences between Sanford and NDSU in book costs, or incidental fees for services. The parties have entered into a Lease Agreement with Sanford Bismarck for the location where the College is currently located (512 N. 7th Street, Bismarck, ND 58501). It is a five-year lease with two optional five-year renewals. During the first three years of the first term, NDSU only pays $1 per year for the leasehold interest. In addition, during the first three years, Sanford will provide all facility operating costs, such as: custodial, utilities, and supplies to NDSU at no additional cost. For the final two years of the lease, the cost of the lease will be $20.00 per leased square foot (i.e., 19,376 sq. ft.) plus $4.00 per square foot for Common Area Expenditures. In the event that NDSU opts to renew the lease, the rent shall increase at the lesser of 3% or CPI-All Urban Consumers. Most of the provisions within the Lease Agreement are routine for commercial leases. However, it should be noted that the Agreement is terminable in the event that the Asset Purchase Agreement is not consummated. Sanford College of Nursing must surrender its accreditation when it merges with NDSU. NDSU has already filed an application for accreditation with the Higher Learning Commission.

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The enclosed “Sanford Graduates Employment Statistics” shows that most graduates of Sanford College of Nursing have been employed by Sanford Health. Most Sanford College of Nursing students have participated in the Sanford tuition loan program. The students received up to $12,375 over 2½ years in tuition loans that were cancelled through two years of employment at Sanford, which induced most graduating nurses to seek Sanford employment. As part of the arrangement, Sanford will receive the following: • For not less than fifteen years, the NDSU nursing program in Bismarck shall be referred to as “NDSU Nursing at Sanford Health.” • NDSU will expand its existing “Community of Interest” board to include appropriate Sanford representation. Sanford shall be permitted to appoint its CEO and Chief Nursing Officer (or their designees), although additional Sanford designees may be appointed. • NDSU shall (1) work cooperatively with Sanford to locate teaching opportunities for Sanford’s clinical staff and provide adjunct status at NDSU to such faculty; and (2) prioritize placement of students of NDUS Nursing at Sanford Health at Sanford facilities for clinical training based upon capacity. • NDSU shall provide Sanford access to such books, records, financial statements, student records and such other records as reasonably necessary relating to the transferred assets to the extent allowed by the state’s open record laws. • NDSU agrees that students at NDSU Nursing at Sanford Health are anticipated to be placed in clinical training at Sanford’s medical facilities and will receive priority placement in such facilities based on capacity and scope of programs available at Sanford. Sanford agrees to work cooperatively with NDSU to provide a sufficient number of clinical training sites, student rotations, and preceptorships to meet the student enrollment needs of NDSU Nursing at Sanford Health. To the extent Sanford is unable to accommodate students due to lack of capacity or availability of a specific program, NDSU may explore placements outside of the Sanford network. 4. Financial implications. The five-year budget projection is enclosed. During the first three years of the program, it is estimated that tuition revenues and payments from Sanford Health will cover expenditures. However, beginning in year 4 and thereafter, with the added rent payment to Sanford and associated facility operating costs, state funds would be needed to support the program. At that time, about 79% of the “appropriated” funds would be from tuition income and the remaining 21% from state general funds. It is not unusual for state funds to be used in support of programs that are delivered to meet industry needs. This already occurs in the Fargo Sanford program, for programs such as John Deere or Bobcat.

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5. Legal/policy issues. SBHE Policy 403.1, which requires Board approval for all new programs of study may apply. Paragraph 1 states: Board approval is required for all new programs of study that designate a focused collection of instructional/learning activities the completion of which signifies a level of competence which the awarding institution so designates by a notation on the front of the student transcript. Board approval is required for all requests for appropriations in support of new programs. b. SBHE Policy 909 requires Chancellor approval of all five-year leases. However, because he is currently serving on the Sanford Bismarck Board of Directors, he is requesting that the SBHE act on the proposed lease. Paragraph 6 states, in part: A lease of real property from another entity by the system office shall be approved by the chancellor and a lease of real property by an institution from another entity shall be approved by an institution officer delegated that responsibility pursuant to institution policies. All leases of real property requiring expenditure of public funds by the system or an institution must be limited to the current biennium for which funds have been appropriated or include a termination clause permitting termination at the end of the biennium if appropriated or other available funds are insufficient to continue the lease payments. Leases shall be executed by the institution's president, chief financial officer or other officer delegated that authority by institution policy or procedures. In addition to approval by an institution officer delegated such responsibility, an institution real property lease or lease renewal, including transactions under a master lease or an operating lease related to or part of a real property lease, requires chancellor approval if: a. A lease entered into by NDSU or UND provides for total payments by the institution, including lease or rental, interest and all other payments over the lease term, of $500,000 or more; . . . c. The lease term is five years or more. c. SBHE Policy 902.12 would appear to apply because it requires SBHE approval to name a campus building: The Board has final authority to name campus buildings, building additions, auditoriums and stadiums. Authority to name individual classrooms or lecture halls, meeting rooms, dining areas, athletic fields (including fields with minimal improvements such as bleachers, concessions areas and locker rooms) and other areas within buildings or other facilities is delegated to the institutions. All requests requiring Board approval shall be submitted to the Chancellor and forwarded to the Board with the Chancellor's recommendation.

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6. Academic issues. Addressed in paragraph 3. 7. Coordination. • SBHE – President Bresciani briefed the SBHE about the proposal during the presidents’ comments at the November 21, 2013, meeting • Chancellor’s Cabinet – surveyed by email • Chancellor’s Senior Staff – March 17, 2014 • Academic Affairs Council – surveyed by email 8. Enclosures. • Five-year budget projection • November 8, 2013, Memorandum of Understanding • Lease agreement • Asset Transfer Agreement • Sanford Graduates Employment Statistics 9. Contact information. • NDSU General Counsel Christopher Wilson, [email protected], 701-231-7215 10. Chancellor’s recommendation. Recommend approval of the proposed motion. [Disclosure, I am a member of the Sanford Health – Bismarck Board of Directors.]

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Year 2013 2012 2011 2010 2009

• • • • •

Total Number of Graduates

Employed at Medcenter One/Sanford

% at Sanford /MCO

45 42 43 44 (42 employed at 6 months after graduation) 44

41 36 41

91% 86% 95%

Employed in North Dakota at other facility * 1 6 2

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73%

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80%

% at other ND facility

Employed Out-of-State

% Outof- State

2% 14% 5%

3 0 0

7% 0% 0%

8

18%

2

5%

8

18%

1

2%

2013 Stanley 2012 Sanford Fargo (3), Essentia, St. Alexius, Oaks 2011 St. Alexius, Dickinson 2010 Beulah, Missouri Slope Care Center Bismarck, Minot (3), Linton, St. Gabriel’s Bismarck, Triumph Mandan 2009 St. Alexius, Dickinson, Wishek, Carrington, Minot, Harvey, Linton, Missouri Slope Care Center Bismarck

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Summary of Proposed Action SBHE Meeting – March 27, 2014

1. Issue: Four honorary doctorate degrees at the University of North Dakota. 2. Proposed motion: “The Board authorizes the University of North Dakota to award honorary doctorate degrees to Karen Nyberg, Linda Pancratz, Mike Jacobs, and William Sherman.” 3. Background: The UND Honorary Degrees Committee forwarded the names of four individuals who were reviewed thoroughly by that committee and the University Senate, where each nominee received unanimous approval (Senate meeting minutes of 6 February 2014). 4. Financial implications: None. 5. Academic implications: None. 6. Legal/policy issues: SBHE Policy 430.1 states, in part: An honorary doctoral, masters, specialist, baccalaureate, or associate degree may be awarded by an institution in accord with this policy when the institution has been granted authority to award the respective degrees. * * * An institution may not award an honorary degree until it has been approved by the Board upon nomination by the Chancellor or the president of an institution and recommendation by the Chancellor. 7. Review Process: • UND Honorary Degrees Committee • UND Senate • Chancellor’s Senior Staff 8. Enclosures: • SBHE Policy 430.1 • Biographical information concerning Karen Nyberg, Linda Pancratz, Mike Jacobs, and William Sherman. 9. Contact person: Dr. Robert Kelley. 10. Chancellor’s Recommendation: Recommend approval.

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UNIVERSITY OF NORTH DAKOTA, MARCH 27, 2014

400: ACADEMIC AFFAIRS

REQUESTED ACTION: 430.1 Approval of four honorary Doctor of Letters degrees.

BACKGROUND INFORMATION: To be presented at Board meeting.

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UND.edu Office of the President Twamley Hall Room 300 264 Centennial Drive Stop 8193 Grand Forks, ND 58202-8193 Phone: 701.777.2121 Fax: 701. 777.3866

February 26, 2014

Larry Skogen, Interim Chancellor North Dakota University System 600 E Boulevard Avenue, Dept. 215 Bismarck, ND 58505-0230 Dear Chancellor Skogen: In accordance with State Board of Higher Education policy 430.1, attached herewith is my nomination of four candidates to receive honorary degrees from the University of North Dakota. They meet criteria established by the State Board of Higher Education and the University of North Dakota and were approved for submission by the University Senate on February 6, 2013 . I am pleased to forward to you with my strongest support and endorsement.

\&erely, Robert 0. Kelley President Attachments

The University of North Dakota is an equal opportunity I affirmative action institution.

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UNIVERSITY

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F

lNij)

NORTH

DAKOTA

SCHOOL OF MEDICINE~ HEALTH SCIENCES DErARTMENT OF ANATOMY AND CELL BIOLOGY 501 NORTH COLUMBIA ROAD r.o. BOX 9037 GRAND FORKS , NORTH DAKOTA 58202-9037 (701) 777-2101 FAX (701) 777-2477

President R. 0. Kelley University of North Dakota

20 Febrnary 2014

Dear Dr. Kelley The UND Honora1y Degrees Committee is f01warding the names of four (4) individuals who were reviewed thoroughly by our committee, then brought for review and discussion before the University Senate, where each nominee received unanimous approval (Senate meeting minutes of 6 Febrnaiy 2014). The individual packets that we reviewed are available on the Honora1y Degree Blackboard site through the Provost's office. Dr. Heitkamp will no doubt be in touch ' with regards to your accessing the materials to inf01m the SBHE. In keeping with the confidential nature of the process until final approval by the SBHE is granted, I have not included the names of the nominees in this memo. Please do not hesitate to contact me if you have any questions about the nominees or the nomination process.

Best regards,

C'1 Jon Jackson, PhD Chair, Senate Honora1y Degrees Committee

cc:

Dr. Thomas DiLorenzo, Provost and VP AA Dr. Thomasine Heitkamp, Provost's office Honorary Degree file/annual rep011

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North Dakota State University, March 27, 2014 Authorize NDSU to proceed with construction of a new shop at Carrington Research Extension Center (CREC) in the amount of $350,000 to be funded from local funds.

Project Description A new shop of sufficient size is required so that Center staff may perform repair and maintenance on the Center’s larger equipment. The existing shop is far too small for a majority of the department’s equipment and typically can only accommodate smaller equipment repair projects. Current facilities were constructed in 1960 and are not of sufficient size to accommodate modern equipment size. Additionally, the current equipment shop makes it extremely difficult to comply with worker safety standards. Projected dimensions of the shop are 60ft by 90ft. Shop will have a concrete floor, heat, large overhead doors to allow access for larger equipment and will be insulated.

Consistency with Campus Facility Master Plan and Budget Yes, has been an ongoing need defined in CREC master plan.

SBHE and/or Legislative History N/A Estimated Total Purchased or Donated Costs (ALL costs should be included in the estimate, unless specifically noted otherwise.) Planning, Permits and Insurance (design costs associated with current project, OMB preplanning revolving funds, architect and engineer fees, permits, insurance) Land/Building Preparation and Purchase or Donated Costs (land acquisition and site preparation/development) Demolition and Disposal Construction (foundation and building construction or renovation, including fixed equipment, landscape, infrastructure and utilities, mechanical and electrical, parking and driveways or roadways Institutional work (value of work completed by institutional trade staff) Contingency Hazardous Material Abatement Other, including 3rd party costs (please describe) SUBTOTAL Furniture, Fixture and Equipment (FF&E) TOTAL

Amount $24,800 $0.00 $0.00 $296,200 $0.00 $29,000 $0.00 $0.00 $350,000 $0.00 $350,000

No other work, other than that specified within this request, is required for the completion of the project not is other work planned to supplement this project using funding or authority not included within this request.

Future Operating/Improvement Costs and Funding Sources

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Annual operating cost = $2,550 funded from appropriated funds.

Source and Availability of Funds (including FF&E) The source of funding is from institutional collections that are sufficient for the project budget and

are available for use. Funds are as a result of better-than-expected livestock and seed stock sales. The funds do not include any unrestricted gift funds or donations. Project Management Oversight (consistent with 9/25/13 SBHE approved guidelines) The NDUS Capital Project Management Checklist is attached for this project. Estimated Project Timeline and Completion Date Project start date = summer 2014. Project completion date = December 2014. SBHE Capital Criteria (address each of the criteria below) • Project addresses current life, health and safety issues • Yes, the current facility is both small and limits the incorporation of worker safety measures into the everyday work environment. • Project addresses compliance with local, state or federal law or other requirements Yes, the new shop facility will allow the department to fully embrace worker safety concerns. • Project corrects significant deferred maintenance • No, project addresses a major facility deficiency. • Project addresses a critical maintenance need defined by situations which must be addressed, and which, if neglected, could result in substantial damage to the structural integrity of the building Not applicable in this situation. • Project meets a compelling programmatic or accreditation justification consistent with campus mission and strategic goals • This project will replace an outdated facility that prevents department staff from performing basic maintenance and repair of larger scale equipment. This major facility deficiency prevents the utilization of staff capabilities and expertise, increases frequency of equipment breakdown, and increases overall department operational costs. • Project has been partially funded by the legislature in a previous biennium, but is not yet complete No, this project has not received previous legislative funding. • Project is supported by significant outside funding • This project is fully supported by non-general fund resources.

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• •

• • • • • •

• •

• •

Space will be used to advance a specific program or activity that is a high priority of the state Yes, this building will provide primary service and support for the department’s large equipment which is critical toward performing all field operations for the foundations seedstocks program and selected field operations for the agronomy research program. Project addresses an urgent infrastructure need Yes, the current shop was built around 1962 and designed for equipment of size and scale reflective of the operations and technology of 50 years ago. Project is consistent with campus master plan and is highly rated by the campus Is listed in the 2012 master plan in the unranked major capital projects section Project is necessary based on clearly demonstrated condition of existing space Existing space is very limited and only allows indoor service and maintenance of CREC’s smaller scale equipment. Small size prevents staff from making equipment repairs during the time of year when staff are best able to allocate time for this activity. Project fosters the consolidation of services or enhances operating efficiencies This project will allow CREC staff to service a significantly larger proportion of the programs equipment thereby reducing the major labor costs associated by the current need to have area implement dealers service minor and moderate skill level jobs. Project enables the institution to remove obsolete or unnecessary facilities The present facility though small is sound and will be re-purposed.

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NDUS CAPITAL PROJECT MANAGEMENT CHECKLIST 08-23-13

Section 1 – Pre-Planning and Authorization Task

Architect has been retained for pre-planning cost estimates or estimates have been completed internally; and all contracts have had the proper legal review – See SBHE policies 902.3, #5 and 902.5 SBHE and/or Legislative authorization (if required) has been requested – See SBHE policies 902.1, 902.3 and procedure 902 Project impact on institution has been reviewed and properly communicated Project cost estimate includes all components including design costs; architect and engineer fees; permits; insurance; land acquisition, and site preparation or development; demolition and disposal; foundation and building construction or renovation including fixed or attached equipment and furnishings; landscaping; infrastructure and utilities; mechanical or electrical; parking and driveways or roadways; hazardous materials abatement; third-party costs; contingencies; and value of work completed by institution trade staff – See SBHE policy 902.3, 6 Local municipality, third-part code official, or other competent licensed official has been consulted on project for code compliance, regulatory considerations, and building permits as required.

Status (completed, ongoing, to be completed) To be completed

Individual Responsible Kevin Matheson

To be completed

Kevin Matheson

Completed

Kevin Matheson

Completed

Kevin Matheson

To be completed

Architect & Kevin Matheson

Section 2 – Project Design Task Agency head has appointed selection committee for Architect if required by estimated fee (over $25,000) – See SBHE policy 902.5 Architect informed of project funding requirements as it applies to scope of work and what must be included within the project budget – See SBHE policy 902.3, 6

Status N/A


Completed

Kevin Matheson

106

Institution and architect will determine what construction delivery method is most appropriate – See SBHE policy 902.5 (Note: if CM selected, architect will confirm that construction delivery method(s) comply with NDCC 48-01.2) If CM selected, project is automatically exempt from completion and filing of this checklist. A/E Contract reviewed by legal counsel for compliance Institution confirms that Architect’s design complies with statutory regulations for code compliance including ADA Bid process is in compliance with laws and policies – See SBHE policy 902.3, 8

To be completed


To be completed To be completed

Kevin Matheson

To be completed

Kevin Matheson

Status


Kevin Matheson

Section 3 – Construction Task Builder’s risk insurance is in place – See SBHE policy 902.3, 10 Institution has identified an individual who will be responsible to coordinate work with the Prime Contractor It has been communicated to the General Contractor that they will be responsible for coordinating work between trades Institution has identified an individual who will review and approve change orders Institution has identified an individual who will review and approve pay requests and monitor expenditures against project budget Institution has identified an individual who will conduct regular site observations and monitor project schedule Any changes in project scope and/or funding source or use have received the appropriate approvals – See 902.3, (1) Institution will notify State Fire and Tornado of additional new space if required Institution will confirm municipality or other code official has issued a Certificate of Occupancy prior to occupancy Institution has identified an individual who will conduct final inspection and sign-off


Kevin Matheson

To be completed

Kevin Matheson


Kevin Matheson

To be completed

Kevin Matheson

To be completed

Kevin Matheson


Kevin Matheson

To be completed


Kevin Matheson

Kevin Matheson

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University of North Dakota

March 27, 2014

Authorize increase for general renovation work and mechanical upgrades to the existing Upson I building from $500,000 to an estimated cost of $600,000, with funding from 11-13 state appropriated extraordinary repair funding. .

Project Description: Modify the existing building mechanical system. Scope of work includes replacement and upgrade of the forty-year-old 100 ton chiller and associated equipment. Bids are higher than the original estimated project cost.

Consistency with Campus Facility Master Plan and Budget: This project coincides with the goals of the UND Campus Facility Master Plan in its relation to maintaining the existing buildings while decreasing outstanding deferred maintenance.

SBHE and/or Legislative History: During the November 15, 2012, SBHE meeting, UND’s request to proceed with general renovation work and mechanical upgrades to the existing Upson I, at an estimated cost of $500,000, to be funded one-time (2011-2013) Legislative authorized extraordinary repairs funding, was approved.

Estimated Total Purchased or Donated Costs: $600,000

Planning, Permits and Insurance (design costs associated with current project, OMB preplanning revolving funds, architect and engineer fees, permits, insurance) Land/Building Preparation and Purchase or Donated Costs (land acquisition and site preparation/development) Demolition and Disposal Construction (foundation and building construction or renovation, including fixed equipment, landscape, infrastructure and utilities, mechanical and electrical, parking and driveways or roadways) Institutional work (value of work completed by institutional trade staff) Contingency Hazardous Material Abatement Other, including third party costs (please describe) SUBTOTAL (if total exceeds $250,000, requires SBHE approval) Furniture, Fixture and Equipment (FF&E) TOTAL

Original Amount $45,000

Revised Amount $35,000

$0

$0

$5,000 $405,500

$5,000 $494,000

$12,000

$24,000

$22,500 $10,000 $0 $500,000 $0 $500,000

$27,500 $14,500 $0 $600,000 $0 $600,000


Future Operating/Improvement Costs and Funding Sources: No additional operating costs or improvement costs are required as a result of this renovation project.

UND | March 27, 2014 | Increase authorization for general renovation/mechanical upgrades to Upson I

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Source and Availability of Funds (including FF&E): All funds for this project are derived from 20112013 Legislative authorized extraordinary repairs funding, and are sufficient and available for the project.

Project Management Oversight (consistent with 9/25/13 SBHE approved guidelines): UND will retain a single prime contractor for this project which will reduce the overall project management requirements. The University architect and capital project coordinator have significant project management experience and together with the single prime contractor and project architect will ensure project management needs are met.

Estimated Project Timeline and Completion Date: Project will begin when authorization is received. Estimated timeline for completion is August 2014.

UND | March 27, 2014 | Increase authorization for general renovation/mechanical upgrades to Upson I

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March 27, 2014

Authorize UND to proceed with renovations in the School of Medicine and Health Sciences (SOMHS) to provide more open collaborative genomics research wet laboratories, create a new bioinformatics laboratory and group associated support and office spaces at an estimated cost of $600,000 funded by $300,000 grant and $300,000 in UND tuition income. Further, request authorization to seek approval from the budget section per NDCC 15-10-12.1.

Project Description: The School of Medicine and Health Sciences was awarded an Epigenetic Centers of Biomedical Research Excellence (COBRE) grant in fall 2013. Reconfiguration of space within the first floor of the SOMHS Edwin James Research Addition and renovations to existing laboratory space will provide additional laboratory work benches in an open laboratory configuration that will allow interdisciplinary research among an increased number of researchers, allowing them to work more effectively within the same general floor area as prior to renovation. The project will provide core facilities for bioinformatics; other laboratory support spaces for cell culture, genomics, and human sample processing/storage; and grouped offices with a collaborative meeting area. The COBRE research construction grant project will utilize a significant number of graduate students as part of the research program. The total affected area is approximately 6,500 square feet. Although construction of the new SMHS is underway, UND anticipates it will continue to use this renovated space for the COBRE and similar programs after the SMHS relocates to the new facility.

Consistency with Campus Facility Master Plan and Budget: This project coincides with the goals of the UND Campus Facility Master Plan in its relation to the support of academic programs and research.

SBHE and/or Legislative History: No prior SBHE or Legislative history exists for this project. Estimated Total Purchased or Donated Costs: $600,000 Planning, Permits and Insurance (design costs associated with current project, OMB preplanning revolving funds, architect and engineer fees, permits, insurance) Land/Building Preparation and Purchase or Donated Costs (land acquisition and site preparation/development) Demolition and Disposal Construction (foundation and building construction or renovation, including fixed equipment, landscape, infrastructure and utilities, mechanical and electrical, parking and driveways or roadways) Institutional work (value of work completed by institutional trade staff) Contingency Hazardous Material Abatement Other, including third party costs (please describe) SUBTOTAL Furniture, Fixture and Equipment (FF&E) TOTAL UND | March 27, 2014 | Authorize SOMHS COBRE renovations

Amount $60,000 $0 $15,000 $260,000 $20,000 $45,000 $0 $0 $400,000 $200,000 $600,000 1

110 No other work, other than that specified within this request, is required for the completion of the project nor is other work planned to supplement this project using funding or authority not included within this request.

Future Operating/Improvement Costs and Funding Sources: No significant increase in operating or improvement costs is anticipated as a result of this project.

Source and Availability of Funds (including FF&E): Funds for this project are derived from $300,000 in COBRE grant funds, which are restricted to construction use and $300,000 in tuition income carryforward funds from UND. All funds are sufficient and available for use.

Project Management Oversight (consistent with 9/25/13 SBHE approved guidelines): A determination has not yet been made on whether a Construction Manager at Risk (CMaR) will be retained for this project. If a CMaR is not engaged for this project, the University architect and capital project coordinator have significant project management experience and together with the project architect will ensure project management needs are met.

Estimated Project Timeline and Completion Date: All work is anticipated to be completed by fall 2014.

UND | March 27, 2014 | Authorize SOMHS COBRE renovations

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March 27, 2014

Authorize UND to proceed with ADA compliance renovations to the entrance of McVey Hall at an estimated cost of $600,000 to be funded with local funds.

Project Description: Project includes construction of a new entrance to McVey Hall, a UND residence facility, whereby improvements will create an ADA compliant entrance. Scope of work includes construction of entrance doors, ramps, exterior modifications, interior modifications, and sundry electrical/mechanical modifications.

Consistency with Campus Facility Master Plan and Budget: This project coincides with the goals of the UND Housing Master Plan in its directives to maintain the existing residence hall facilities in attractive, marketable condition to encourage student retention and on-campus living.

SBHE and/or Legislative History: No prior SBHE or Legislative history exists for this project. Estimated Total Purchased or Donated Costs: $600,000

Planning, Permits and Insurance (design costs associated with current project, OMB preplanning revolving funds, architect and engineer fees, permits, insurance) Land/Building Preparation and Purchase or Donated Costs (land acquisition and site preparation/development) Demolition and Disposal Construction (foundation and building construction or renovation, including fixed equipment, landscape, infrastructure and utilities, mechanical and electrical, parking and driveways or roadways) Institutional work (value of work completed by institutional trade staff) Contingency Hazardous Material Abatement Other, including third party costs (please describe) Miscellaneous and advertisement SUBTOTAL Furniture, Fixture and Equipment (FF&E) TOTAL

Amount $65,000 $0 Included with Construction $468,500 $30,000 $25,000 $10,000 $1,500 $600,000 $0 $600,000

No other work, other than that specified within this request, is required for the completion of the project nor is other work planned to supplement this project using funding or authority not included within this request.


Source and Availability of Funds (including FF&E): All costs for this project will be funded by Housing and Auxiliary Facilities System excess reserves designated for plant improvements, and are sufficient and available for the project. UND | March 27, 2014 | Authorize McVey ADA renovation project

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Project Management Oversight (consistent with 9/25/13 SBHE approved guidelines): ): UND will retain a single prime contractor for this project (as per single prime contractor requirements within NDCC 48-01.2 whereby if estimates for any one mechanical, electrical, or general contract is less than $25,000 it may be included with another prime contract bid) which will reduce the overall project management requirements. The University architect and capital project coordinator have significant project management experience and together with the single prime contractor and project architect will ensure project management needs are met.

Estimated Project Timeline and Completion Date: All work is anticipated to be completed by fall 2014.

UND | March 27, 2014 | Authorize McVey ADA renovation project

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March 27, 2014

Authorize UND to proceed with installation of fire protection systems in Johnstone Hall, a residence hall facility, at an estimated cost of $1,500,000 to be funded from local funds.

Project Description: Project includes the installation of a fire protection system (sprinkler system) that requires the removal of asbestos containing building components. In addition, and as a result of removal of the ceiling containing asbestos, correct or amend any non-code compliant work or any other deferred maintenance which may be discovered.

Consistency with Campus Facility Master Plan and Budget: This project coincides with the goals of the UND Campus Facility Master Plan in its relation to the support of resident services and the need for adequate fire safety programs.

SBHE and/or Legislative History: No prior SBHE or Legislative history exists for this project. Estimated Total Purchased or Donated Costs: $1,500,000

Planning, Permits and Insurance (design costs associated with current project, OMB preplanning revolving funds, architect and engineer fees, permits, insurance) Land/Building Preparation and Purchase or Donated Costs (land acquisition and site preparation/development) Demolition and Disposal Construction (foundation and building construction or renovation, including fixed equipment, landscape, infrastructure and utilities, mechanical and electrical, parking and driveways or roadways) Institutional work (value of work completed by institutional trade staff) Contingency Hazardous Material Abatement Other, including third party costs (please describe) SUBTOTAL (if total exceeds $250,000, requires SBHE approval) Furniture, Fixture and Equipment (FF&E) TOTAL

Amount $150,000 $0 See Hazardous Material $1,160,000 $40,000 $75,000 $75,000 $0 $1,500,000 $0 $1,500,000

No other work, other than that specified within this request, is required for the completion of the project nor is other work planned to supplement this project using funding or authority not included within this request.


Source and Availability of Funds (including FF&E): All funds for this project will be from Housing and Auxiliary Facilities System excess reserves designated for plant improvements, and are sufficient and available for this project.

Project Management Oversight (consistent with 9/25/13 SBHE approved guidelines): UND will retain Construction Manager at Risk (CMaR) services for this project, which will reduce the overall UND | March 27, 2014 | Authorize installation of Johnstone Hall fire protection system

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project management requirements. The University architect, in conjunction with the capital projects coordinator, has significant project management experience and together with the CMaR and project architect, will ensure project management needs are met.

Estimated Project Timeline and Completion Date: Project is anticipated to be completed during the 2014 summer.

UND | March 27, 2014 | Authorize installation of Johnstone Hall fire protection system

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North Dakota State University, March 27, 2014

Authorize NDSU to proceed with the reconstruction of parking lots at an estimated cost of $2,000,000 to be funded from Parking Office local funds.

Project Description “AD” Parking Lot (approximately 135 parking spaces) is the primary lot for staff and faculty on the east side of campus. It will be completely reconstructed as it has had significant patching and repairs over the past several years and has exceeded its useful life. “T2” Parking Lot (approximately 150 parking spaces) will be expanded to add 98 new parking stalls to provide additional parking spaces on the south side of campus. An adjacent lot, newly reconstructed T lot, has had a waiting list of up to 100 students the past few years. Additional parking spaces are also needed for faculty located in the new Minard Hall additions. The existing parking lot also accommodates a variety of users, including faculty, staff, and visitors, and is also used for music and theatre events, summer conferences, and other large campus gatherings. “BH” West Parking Lot (approximately 54 parking spaces) was acquired with Barry Hall and is one of three parking lots serving the building. Two of the lots immediately adjacent to the building were completely reconstructed during the renovation of the facility, which was completed in 2009. The BH West Lot had no refurbishment done as part of the renovation project. This lot is at the end of its useful life and will be completely reconstructed. Consistency with Campus Facility Master Plan and Budget BH and AD Lots are listed in the 2012 Master Plan Parking Facility Condition Assessment as being in poor and very poor condition. Expansion of T2 Lot supports the growth of our student and faculty population. SBHE and/or Legislative History None Estimated Total Purchased or Donated Costs (ALL costs should be included in the estimate, unless specifically noted otherwise).

Planning, Permits and Insurance (design costs associated with current project, OMB preplanning revolving funds, architect and engineer fees, permits, insurance) Land/Building Preparation and Purchase or Donated Costs (land acquisition and site preparation/development) Demolition and Disposal Construction (foundation and building construction or renovation, including fixed equipment, landscape, infrastructure and utilities, mechanical and electrical, parking and driveways or roadways Institutional work (value of work completed by institutional trade staff) Contingency

Amount $350,000 $ $ $1,500,000 $5,000 $145,000

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Hazardous Material Abatement Other, including 3rd party costs (please describe) SUBTOTAL (if total exceeds $250,000, requires SBHE approval) Furniture, Fixture and Equipment (FF&E) TOTAL

$ $ $2,000,000 $ $


Future Operating/Improvement Costs and Funding Sources N/A

Source and Availability of Funds (including FF&E) The project will be funded from the Parking Office local fund, which is sufficient and available for the work. Project Management Oversight (consistent with 9/25/13 SBHE approved guidelines) The NDSU Facilities Management Director will be the project manager supporting this project in compliance with SBHE guidelines approved 9/25/13. Estimated Project Timeline and Completion Date The project will be bid out in March/April, 2014 and construction will start after commencement in May 2014 with a substantial completion date by August 15, 2014.

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North Dakota State College of Science, March 27, 2014 Authorize the North Dakota State College of Science to proceed with the Heating Plant DA tank replacement project estimated to cost $300,000 from 13-15 deferred maintenance funding.

Project Description: The Demolition will consist of removing the piping from the existing deaerator. This piping includes four boiler feedwater lines, four boiler feedwater recycle lines, two drain lines, two level control lines, overflow line, vent, level glass, vacuum breaker, chemical inlet, steam inlet, water inlet, compressed air line, temperature and pressure instruments, and two pressure relief valves. Four electrical conduits and wiring along with receptacles will need to be removed and set aside during demolition and installation. Overhead lighting will need to be temporarily disconnected to help with demolition. The Installation will include installing the new deaerator vessel. Piping installation will require modifications to the existing piping. A new boiler feed water header will be installed to help the transition from the deaerator to the four boiler feed water pumps. All gauges and instruments will be reinstalled and power returned to the instruments with new control wiring. The electrical receptacles will be reinstalled at the same locations and other wiring that was removed during demolition will be reinstalled. When the deaerator is set and pipes are reinstalled, insulation will be added to the vessel and piping. The pump piping, control and instrument packages and valves will be reused wherever possible.

Consistency with Campus Facility Master Plan and Budget: This project was not specifically identified in our last Master Plan. The urgency of this project became apparent during a proactive testing of the tanks wall thickness. The results showed significant tank wall thinning that presents a high risk for failure in this pressurized vessel. This tank is essential to the central heating system of the campus. A failure of this tank would result in the loss of heat to our campus buildings for an extended period of time.

SBHE and/or Legislative History: No prior SBHE or Legislative history exists for this project. Estimated Total Purchased or Donated Costs : $300,000

Planning, Permits and Insurance (design costs associated with current project, OMB preplanning revolving funds, architect and engineer fees, permits, insurance) Land/Building Preparation and Purchase or Donated Costs (land acquisition and site preparation/development) Demolition and Disposal Construction (foundation and building construction or renovation, including fixed equipment, landscape, infrastructure and utilities, mechanical and electrical, parking and driveways or roadways Institutional work (value of work completed by institutional trade staff) Contingency

Amount $24,000 $0 $50,000 $200,000 $0 $26,000

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Hazardous Material Abatement Other, including 3rd party costs (please describe) SUBTOTAL (if total exceeds $250,000, requires SBHE approval) Furniture, Fixture and Equipment (FF&E) TOTAL

$0 $0 $300,000 $0 $300,000


Future Operating/Improvement Costs and Funding Sources: This project is a direct replacement of an existing tank and will not have an impact on future operating costs.

Source and Availability of Funds (including FF&E): The funding would come from the Deferred Maintenance pool allocation from the 63rd legislative session, and are sufficient and available for this project.

Project Management Oversight (consistent with 9/25/13 SBHE approved guidelines): NDSCS Vice President for Business Affairs (engineer) and the NDSCS construction manager will provide project management oversight. Estimated Project Timeline and Completion Date: The project would begin by May 1 and would be estimated to be completed by September 15th 2014

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Williston State College, March 27, 2014 Authorize Williston State College to extend by 2 years the term of the previously approved lease agreement with the WSC Foundation to enable the construction by the Foundation, or other private entity, of apartment units on the WSC campus to provide housing for WSC employees and employees of other state and local government entities and local hospital and clinic employees. The 2 year extension of the lease is necessary to facilitate the Foundation’s financing of the apartment building construction.

Project Description and History: Williston leads the state in both housing shortage and rent inflation. Many potential employees considering employment at WSC have stated to our Human Resources Director that WSC “needs to do something about housing.” Avertisements for “new” Williston apartments have listed pricing for unfurnished units between $2,350 and $3,750 per month. On December 6, 2011, WSC met with Foundation Board members, the Mayor of Williston, the Superintendent of Williston Schools, a City Commissioner, the City Auditor, the CEO of the local hospital, and two non-profit CEOs to consider the building of two 64-bedroom apartment buildings for government and critical healthcare workers. In an effort to recruit and retain both government and critical healthcare employees in an area undergoing severe housing and wage inflation, the consensus of the group was that the Williston State College Foundation would build two 64-bedroom apartments to provide housing for College, school district, city, state, county, city parks, and critical healthcare agency employees. Two adjacent properties on the south side of the WSC campus were identified as potential sites for these complexes. The Foundation made the decision to move forward with one of the apartment buildings, and obtained a Ground Lease from the SBHE for a tract of land on WSC campus dated April 2012. The Foundation then built one 74-unit apartment complex on the Campus, which was opened in August of 2013 at full capacity. The project is considered a success, and the demend for housing has shown that the contemplated second apartment building of the same size is necessary for the College and other agencies to house employees. Open units in this building will be made available to non-traditional students; however, student housing would be managed through the third party developer, and not through WSC. A map of the WSC campus is attached, the location of the the recently completed apartment complex on the southeast corner of Campus, is marked with a letter “C” and the location of the proposed apartment complex (with parking lot space) immediately to the west of the completed building is marked with the letter “R”.

Consistency with Campus Facility Master Plan and Budget: This project is consistent with the updated campus master plan.

SBHE and/or Legislative History: The first apartment building was approved by SBHE in April of 2012. The second apartment building was approved by the SBHE in November of 2013. The current request for a two year extension of the thirty year lease has not been not been addressed in an official capacity by either the SBHE or the Legislature.

Estimated Total Purchased or Donated Costs: The SBHE, acting on behalf of Williston State College, will lease the following property, a 2.40 acre or 103,000 square foot tract, located on the College Campus, to the Williston State College Foundation for a period of 32 years, and will receive the sum of $27,000 per year for the lease of land with the following legal description: Commencing at the southwest corner of STREET DEDICATION EAST HIGHLAND DRIVE A PORTION OF

120 SUBLOT 1 Located in the SE1/4 SE1/4 of Sec. 13, T154N-R101W, 5th P.M., City of Williston, Williams County, North Dakota, according to the recorded plat thereof, per Doc. No. 530106; thence North 00 degrees 05 minutes 01 seconds East, record bearing, along the west line of said STREET DEDICATION EAST HIGHLAND DRIVE A PORTION OF SUBLOT 1, a distance of 50.40 feet, to the northwest corner of said STREET DEDICATION EAST HIGHLAND DRIVE A PORTION OF SUBLOT 1 and the northerly Right of Way line of East Highland Drive; thence westerly, along said northerly Right of Way line of East Highland Drive, 417.06 feet, to the point of beginning of the tract of land to be described; thence continue westerly, along said northerly Right of Way line of East Highland Drive, 264.30 feet; thence North 02 degrees 02 minutes 05 seconds East, 407.33 feet; thence easterly, parallel with the northerly Right of Way line of East Highland Drive, 264.19 feet; thence South 02 degrees 02 minutes 05 seconds West, 407.33 feet, to the point of beginning. Real estate size is 2.4 acres (103,000 square feet). Subject to easements of record, if any.

The Foundation will use the land to build an apartment complex, currently estimated to cost $11 million, that will be rented out, maintained, managed, and operated by the Foundation or its assignee. All costs for this project will be assumed by the Foundation. If approved by the State Board, WSC and the WSC Foundation will come to a separate agreement to provide housing to WSC personnel and WSC student. After 32 years, the premises, along with any buildings or fixtures, will revert to WSC.

Future Operating/Improvement Costs and Funding Sources: WSC has no financial obligation related to the construction or maintenance and operation of the apartment complex. All construction, management, staffing and operation of the complex will be provided by the WSC Foundation or it’s assignee. WSC will receive $27,000 annually from the Foundation as consideration for the lease agreement, beginning in the year 2014.

Source and Availability of Funds: This project will be funded by the WSC Foundation, through financing. Estimated Project Timeline and Completion Date: WSC is anticipating construction to begin in the Fall of 2014 with a completion date within 18 months of start of construction.

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Summary of Proposed Action SBHE Meeting – March 27, 2014

1. Issue: Approval of Covenant of Dedication, Use and Ownership, required by U.S. Corps of Engineers. 2. Proposed motion: The State Board of Higher Education approves the proposed Covenant of Dedication, Use and Ownership, which is required by the U.S. Corps of Engineers as part of the construction of the Williston community wellness center on the grounds of the Williston State College. 3. Background: The SBHE entered into a Joint Powers Agreement dated December 15, 2011, with the Williston Parks and Recreation District, to provide for the construction of a community wellness center by the Parks and Recreation District on the grounds of Williston State College, and involving a lease of 17.65 acres of land for the wellness center located in northeastern quadrant of campus. During the course of construction of the wellness center, it was determined that construction of the center’s parking lot impacted a wetlands area on campus, which drained into the Missouri River, and which is therefore subject to management by the U.S. Corps of Engineers (COE), pursuant to Clean Water Act. The COE is agreeable to allow the fill in of that wetlands area by the Parks and Recreation District, in order to accommodate the parking lot construction, but in connection with issuing a Permit to allow for such activity, it also requires a relocation and re-establishment of that wetlands area. This new “wetland mitigation area” area will be located less than 100 feet north of the filled in area; both areas are on the eastern edge of campus and are within the tract of leased land. The COE requires the attached Covenant of Dedication, Use and Ownership, by which the SBHE, land Owner, and its Lessee, Williston Parks and Recreation District, agree that the wetland mitigation area will be established and maintained for the duration of the Joint Powers Agreement, 50 years. The Parks and Recreation District is responsible, as part of its construction obligations under the Joint Powers Agreement, to construct and pay for the new wetlands area; and as part of its operations and management obligations under the Joint Powers Agreement, it is also responsible for maintenance and management of the new wetlands area during the term of the Joint Powers Agreement. 4. Financial implications: None. The Parks and Recreation District is responsible for construction and costs for the wetlands area, as part of its obligations under the Joint Powers Agreement of December 15, 2011. 5. Academic implications: None.

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6. Legal/policy issues: No changes from the information provided in connection with the Joint Powers Agreement at end of 2011. 7. Review Process: • Cynthia Wagner Goulet, General Counsel for Williston State College and NDUS Special Assistant Attorney General • Murray G. Sagsveen, NDUS Chief of Staff and Director of Legal Services 8. Enclosures: • Proposed Covenant of Dedication, Use and Ownership 9. Contact information: • Cynthia Wagner Goulet, [email protected] 10. Chancellor’s Recommendation: Recommend approval.

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COVENANT OF DEDICATION, USE AND OWNERSHIP THIS COVENANT OF DEDICATION, USE AND OWNERSHIP dated this _____ of __________________, 2014, (“COVENANT”) is made by NORTH DAKOTA STATE BOARD OF HIGHER EDUCATION, whose mailing address is State Capitol, 600 East Boulevard Avenue, Department 215, Bismarck, ND 58505-0230, (“BOARD”) and Williston Parks and Recreation District, whose mailing address is 1002 11th Street West, Williston, ND 58802 (“PARK DISTRICT”). BOARD and PARK DISTRICT now stipulate to the following statements of fact, and further agree to restrict the use and title of that realty described in Attachment 1 to this document (hereinafter “LAND”) in accordance with the terms and conditions set forth herein, all in accordance with Section 404 of the Clean Water Act, 33 U.S.C. 1344. STIPULATIONS OF FACT 1. That the subject LAND is located on the campus of Williston State College, which is an institution of higher education under the governance of the BOARD; and is also within the tract of land consisting of approximately 17.65 acres on the college campus which BOARD is leasing to PARK DISTRICT for a term of fifty (50) years under a Joint Powers Agreement (Attachment 2) to the PARK DISTRICT for PARK DISTRICT’s construction, operation, maintenance and management of a community wellness center during the term of the Joint Powers Agreement. 2. That PARK DISTRICT, pursuant to the authority granted to it by the BOARD in the Joint Powers Agreement, is the applicant for U.S. Department of the Army permit number NWO-2012-1742-BIS to place fill material in and on another certain tract of land which contains wetlands and which is also located within the larger leased tract of land, in order to accommodate the construction of the community wellness center, and that the U.S. Department of the Army, Corps of Engineers has regulatory jurisdiction over the discharge of dredged or fill material into this wetlands area pursuant to Section 404 of the Clean Water Act, 33 U.S.C. 1344. 3. That the Omaha District of the U.S. Army Corps of Engineers is in agreement that the PARK DISTRICT, in connection with the construction and operation of the community wellness center, is permitted to discharge fill material in wetlands in accordance with the terms and conditions of U.S. Department of the Army permit Number NWO-2012-1742-BIS and that in consideration for the discharge of fill material in the wetlands, the PARK DISTRICT will provide mitigation for the adverse environmental effects resulting from the placement of fill material in the wetland by dedicating the realty described herein as LAND, shown in Attachment 1 and consisting of .411 acres more or less for use as a conservancy area in accordance with the terms and conditions of this document and the above-mentioned permit. 4. That the above-described Dedication shall consist of the execution of this document by all parties necessary to restrict the use and title of the LAND; and that this document shall be recorded in the Office of the Register of Deeds for Williams County, North Dakota. 5. That upon receipt of a certified copy of this document, as recorded in the Office of the County Register of Deeds for Williams County, North Dakota, the District Engineer of the Omaha District of the U.S. Army Corps of Engineers will issue a validated permit, number NWO2012-1742-BIS, to BOARD, Owner, and PARK DISTRICT, Lessee, and that said permit shall be issued in consideration for the execution of this COVENANT.

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6. That the terms and conditions of this COVENANT OF DEDICATION shall, as of the date of execution of this document, bind Owner and Lessee to the extent of their legal and/or equitable interest in the LAND; and that this COVENANT shall run with the land and be binding on Owner and Lessee and their successors and assigns. 7. That the terms and conditions of this COVENANT OF DEDICATION shall be both implicitly and explicitly included in any transfer, conveyance, or encumbrance of the LAND or any part thereof, and that any instrument of transfer, conveyance, or encumbrance affecting all or any part of the LAND shall set forth the terms and conditions of this document either by reference to this document or set forth in full text. OWNERSHIP; USE RESTRICTIONS The BOARD, as Owner of the LAND, and the PARK DISTRICT, as Lessee of the LAND for a term of 50 years, and pursuant to the terms and authority granted under Joint Powers Agreement between the parties dated December 15, 2011, hereby agree to restrict the use and title of the LAND as follows for the duration of the Joint Powers Agreement: 1. There shall be no construction or placement of structures or mobile homes, fences, signs, billboards or other advertising material, or other structures, whether temporary or permanent, on the land. 2. There shall be no filling, draining, excavating, dredging, mining, drilling or removal of topsoil, loam, peat, sand, gravel, rock, minerals or other materials. 3. There shall be no building of roads or paths for vehicular or pedestrian travel or any change in the topography of the land. 4. There shall be no removal, destruction, or cutting of trees or plants; spraying with biocides, insecticides, or pesticides, grazing of animals, farming, tilling of soil, or any other agricultural activity. Management activities are acceptable upon approval from the Corps. 5. There shall be no operation of all-terrain vehicles or any other type of motorized vehicle on the land. 6. This COVENANT OF DEDICATION may be changed, modified or revoked only upon written approval of the District Engineer of the Omaha District of the U.S. Army Corps of Engineers. To be effective, such approval must be witnessed, authenticated, and recorded pursuant to the law of the State of North Dakota. This COVENANT needs to be reviewed by the Corps of Engineers prior to signature to assure compliance with permit conditions. COE REPRESENTATIVE’S INITIAL ____________ 7. This COVENANT OF DEDICATION is made for a period of fifty years, such that the present owner and its heirs and assigns shall be bound by the terms and conditions set forth therein. IN WITNESS WHEREOF, the parties agreeing to the above, do hereby place the signatures of their duly authorized representatives: NORTH DAKOTA STATE BOARD OF HIGHER EDUCATION: By:______________________________________ Kirsten Diederich Its: President

By: __________________________ Kari Reichert Its: Executive Secretary

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State of North Dakota ) ) ss. County of ___________ ) On the _____ day of ______________, 2014, before me, a notary public in and for said county and state, personally appeared Kirsten Diederich to me known to be the President of North Dakota State Board of Higher Education who has executed the within and foregoing instrument, and acknowledged to me that she executed the same. SEAL

__________________________________ Notary Public, State of North Dakota My Commission Expires: ______________

State of North Dakota ) ) ss. County of ___________ ) On the _____ day of ______________, 2014, before me, a notary public in and for said county and state, personally appeared Kari Reichert to me known to be the Executive Secretary of North Dakota State Board of Higher Education who has executed the within and foregoing instrument, and acknowledged to me that she executed the same. SEAL

__________________________________ Notary Public, State of North Dakota My Commission Expires: ______________

[signature page continues] WILLISTON PARKS AND RECREATION DISTRICT: By:__________________________________ Its:__________________________________

State of North Dakota ) ) ss: County of __________ )

On this _____ day of _____________, 2014, before me, a notary public in and for said county and state, personally appeared Darin Krueger, to me known to be the Executive Director of the Williston Parks and Recreation District, and who has executed the within and foregoing instrument, and acknowledged to me that he executed the same. SEAL _______________________________ Notary Public, State of North Dakota My Commission Expires:______________

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VALLEY CITY STATE UNIVERSITY, March 27, 2014 Ratify Chancellor’s interim action authorizing VCSU to proceed with the Historic President’s House – ADA Upgrades at an estimated cost of $450,000, funded $250,000 in 13-15 capital assets funding and $200,000 in private funding.

Project Description The Historic President’s House on the Valley City State University campus has been operating as a Guest Inn and campus event facility since 1996. It has been cared for by the President’s House Preservation Society since and is in need of important upgrades to make it more accessible to alumni and the public. Although the President’s House interior has been lovingly and painstakingly refurbished, accessibility concerns prevent the facility from being fully utilized. To ensure ADA requirements are met an addition to the house is required to the south side of the home to incorporate ADA accessibility on the main level. The addition will require the removal of the existing sun room and applying an exterior design that is appropriate to the Victorian style architecture. The addition totals 750 square feet and will allow for a bedroom/meeting room along with an ADA bathroom on the main level. Currently, these two important spaces are lacking for alumni and the public. Additionally, the house sits on a hillside and limits access for those with mobility concerns. Currently, VCSU utilizes a donated chair-incline lift in the garage to assist these individuals. The lift helps some, but not all with mobility concerns, hence the project allows for an elevator from the garage level and associated ramp to access the new addition’s entrance. This additional space totals 460 square feet. The total project is estimated at $450,000. As part of the 2013-15 legislative session VCSU received $250,000 in additional extraordinary repairs and projects funding to assist in the project. The Foundation and the President’s House Preservation Society have undertaken fundraising efforts for the amounts shown above. Interim approval was required as bids were scheduled to expire before the March 27, 2014 SBHE meeting. Consistency with Campus Facility Master Plan and Budget The President’s House has been a part of VCSU’s campus since 1921 and was used as the residence for college presidents until 1994. Restroom Renovation and Restroom Accessibility Upgrades were part of VCSU’s 2010 and 2012 master plans.

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SBHE and/or Legislative History May 2013 – Legislature authorized $250,000 (SB 2003) of additional extraordinary repairs and projects funds for ADA accessibility at the Historic President’s House. March, 2014 - the SBHE approved spending an additional $200,000 using $65,000 in deferred maintenance funding and $135,000 in donations. March, 2014 -Budget Section amended the request to remove the $65,000 in deferred maintenance funding, and increase the amount of donations to $200,000.

Estimated Total Purchased or Donated Costs (ALL costs should be included in the estimate, unless specifically noted otherwise).

Planning, Permits and Insurance (design costs associated with current project, OMB preplanning revolving funds, architect and engineer fees, permits, insurance) Land/Building Preparation and Purchase or Donated Costs (land acquisition and site preparation/development) Demolition and Disposal Construction (foundation and building construction or renovation, including fixed equipment, landscape, infrastructure and utilities, mechanical and electrical, parking and driveways or roadways) Institutional work (value of work completed by institutional trade staff) Contingency Hazardous Material Abatement Other, including 3rd party costs (please describe) SUBTOTAL (if total exceeds $250,000, requires SBHE approval) Furniture, Fixture and Equipment (FF&E) TOTAL

Requested Authorization $25,000 $0 $0 $390,000

$0 $35,000 $0 $0 $450,000 $0 $450,000


Future Operating/Improvement Costs and Funding Sources Future operating/improvement costs will be shared by the President’s House Preservation Society and VCSU operations and maintenance budget. Source and Availability of Funds (including FF&E) VCSU received $250,000 of additional 13-15 extraordinary repairs and project funding through legislative action (SB 2003) specifically for the President’s home. The President’s House Preservation Society and Foundation will provide up to $200,000 in private funds. The project will not proceed until all sources of funds are in place, sufficient for use, and available or guaranteed by the aforementioned foundation.

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Project Management Oversight (consistent with 9/25/13 SBHE approved guidelines) Project management for this project will remain the same as approved during the February, 2014 SBHE meeting. Estimated Project Timeline and Completion Date The architect was selected in summer 2013 and designs were completed by October 2013. Bids were received in November 2013. Renovation and construction is to begin in spring 2014 with completion by the end of 2014.

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Summary of Proposed Action February 27, 2014, SBHE Meeting 1. Issue: Proposed SBHE Internal Audit Charter 2. Proposed motion: Motion to approve SBHE Policy 802.8 to establish an internal audit charter. 3. Background information: Policy 802.8 was first approved in 2010. The Legislative Assembly, upon the recommendation of the State Auditor, has now funded a consolidated internal audit function within the NDUS, and the SBHE has hired a Chief Auditor. The Chief Auditor is now recommending replacing the former 2010 charter with a new charter. 4. Financial implications. 5. Legal and policy issues. Footnote 8 of the conference committee report for Senate Bill 2003 (2013) states: “Funding for internal audit and legal positions at North Dakota State University and the University of North Dakota is transferred to the University System office. The offices for the positions may remain at each campus but the positions are to report directly to the University System office. The House also transferred the positions.” 6. Review process: • Chancellor’s Cabinet on February 12, 2014 • Chancellor’s Senior Staff 7. Enclosures: • Draft Policy 802.8 Internal Audit Charter 8. Chancellor’s recommendation: Recommend approval.

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SUBJECT: 800s: Financial Affairs

EFFECTIVE: September 26, 2012

Section: 802.8 Internal Audit Functions Charter 1. Overview. Internal audit assists the State Board of Higher Education and all levels of management within the North Dakota University System with: a. Managing business risk; b. Ensuring stewardship and management accountability; and c. Ensuring integrity of assets, operations and financial information. Internal audit functions should be modeled after “International Standards for the Practice of Internal Auditing” and Government Auditing Standards (the “Yellow Book” referred to as generally accepted government auditing standards) using such audit programs, techniques, and procedures considered necessary under the circumstances. The operation of the internal audit function shall be consistent with the Code of Ethics, Professional Practices Framework, and Practice Advisories as promulgated by the Institute of Internal Auditors. Consistent with International Standards for the Practice of Internal Auditing Standards section 1300, the chief audit executive should strive to develop and maintain a quality assurance and improvement program that covers all aspects of the internal audit activity, including both internal and external assessments, with results communicated to senior management and the Board’s Audit Committee. Internal audit is intended to complement, and not to replace, other services at NDUS institutions or in the system office. It has particular relevance for auditing, accounting, internal controls, risk management, and organizational development. Outside of these areas of expertise, internal auditors may require assistance of other experts in the organization or external consultative services. 2. Objective and Scope. The objective of internal audit is to assist the Board’s Audit Committee and administrators in the effective discharge of their duties by furnishing them with analyses, appraisals, recommendations and pertinent comments concerning activities reviewed. The attainment of this objective includes such activities as:

a. Reviewing and appraising the soundness, adequacy, and application of accounting, administrative and other operating controls and promoting effective control at a reasonable cost; b. Ascertaining the extent of compliance with established laws, policies, plans and procedures; 2

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c. Ascertaining the extent to which assets are accounted for and safeguarded from losses of all kinds; d. Ascertaining the reliability of management data developed within the organization; e. Conducting special examinations and reviews at the request of the Board, Audit Committee, chancellor or institutional management; and f. Evaluating the effectiveness, economy and efficiency with which resources are employed and recommending improvements in operations. 3. Authority. In carrying out their duties and responsibilities, all audit staff have access to all data, books, records, files, property, and personnel of the NDUS as necessary to carry out their duties. Access is also granted, as dictated by state law or written agreement, to relevant records of all affiliated foundations, contractors, and other institutional partners. Internal audit is a staff function and internal auditors do not exercise direct authority over other persons, nor do they have authority over any of the activities or operations reviewed. Unless extenuating circumstances dictate, internal auditors may not develop and install procedures, prepare records or engage in activities which would normally be reviewed by internal auditors. Internal auditors may review proposed systems and processes prior to implementation to assure adequate controls will exist. 4. University System Auditor; Appointing Authority; Reporting. The university system auditor is the chief audit executive within the NDUS. The university system auditor and subordinate staff report functionally to the Audit Committee and administratively to the Chancellor. The direct functional reporting to the Audit Committee ensures necessary independence, objectivity and organizational stature; administrative reporting to the Chancellor enables efficient administration. The Chancellor and institution presidents have a corresponding responsibility to assure timely conveyance of substantial findings, including suspected fraud and other illegal activities, through established administrative chain of command, and ultimately to the Audit Committee. On an annual basis, an overview of anticipated future internal audit activities will be presented directly to the Audit Committee by involved agency heads or their representatives. Institutions shall submit annual institution internal audit plans, with audit reports and reviews completed by an institution internal auditor, to the university system auditor. Audit Committee approval is required for appointment, dismissal or termination of appointment and salary and other contract terms of the university system auditor and other NDUS audit staff. The Chancellor is delegated authority to conduct a search for a replacement in the event of a vacancy and recommend a candidate and compensation and other terms to the Audit Committee. The Chancellor is delegated authority for performance reviews and shall recommend salary increases and other personnel actions, including initiation of dismissal or termination proceedings for the university system auditor consistent with policies applicable to other NDUS office professional staff, following consultation with members of the Audit Committee.

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5. Significant Audit Findings; Corrective Findings. An audit finding and recommendation is significant and shall be reported if it is material to the operation, financial reporting, or legal compliance of the audited activity and corrective action has not been fully implemented. A significant audit finding and recommendation includes an internal control shortcoming that does not reduce the risk of irregularity, illegal act, error, inefficient, waste, ineffectiveness, or conflict of interest to a reasonably low level. A significant audit finding and recommendation does not include a recommendation to improve the existing design, execution, or effectiveness of an internal control system already deemed adequate. Examples of significant findings and recommendations include: a. Dishonest or fraudulent activities; b. Inadequate controls to safeguard significant assets from theft, improper or illegal activities and exposure; c. Inadequate separation of duties without mitigating controls; d. Material weaknesses and/or errors in financial reporting; or e. Noncompliance with laws or regulations, contracts or grant agreements and significant noncompliance with operating plans, policies or procedures. Internal audit staff are responsible for performing appropriate audit procedures to verify corrective action of all significant findings no later than six months after the audit report has been issued. Audited findings should first be reviewed with the Chancellor or president and subsequently with the Audit Committee. 6. Liaison with Other Auditors. Internal auditors shall liaise with auditors from the state auditor’s office and other external audit staff to: a. Foster a cooperative working relationship; b. Reduce the incidence of duplication of effort; and c. Promote appropriate information sharing. 7. Confidential and Exempt Records. As dictated by applicable federal and state laws, confidential records provided to internal auditors continue to be confidential in possession of the auditors, except as otherwise provided by law. Employee “personal” information provided to audit staff that is exempt from disclosure under NDCC section 44-04-18.1 and other exempt information continues to be exempt in possession of the auditors, except as otherwise provided by law. As provided by NDCC section 44-04-18, audit staff may withhold from the public reports and records prepared at the direction of, and for presentation to, the Audit Committee or Board until the record or report is mailed or otherwise provided to a member of the Audit Committee or Board. Also as provided by section 44-04-18, audit staff working papers or preliminary drafts may be withheld from the public until the documents are distributed to 4

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a member of the Audit Committee or Board, discussed in an open meeting, or work is discontinued on the draft, whichever first occurs. As provided by NDCC section 54-10-26, a draft audit report released by the state auditor to the Board, Audit Committee or NDUS management is confidential until the final report is issued or work ceases on the audit. As provided in NDCC section 44-04-19.2, the Board or Audit Committee may hold an executive session to consider or discuss closed or confidential records. To hold an executive session, the Board or Audit Committee must first convene in an open meeting and pass a motion to hold an executive session, stating the topic or topics to be discussed and legal authority for holding the executive session. The executive session must be recorded and the recording retained for a minimum of six months. The topic or topics discussed must be limited to those for which the executive session is authorized and previously announced. Final action concerning the topic or topics discussed or considered must be taken in an open meeting, unless final action is required by law to be taken in a closed or confidential meeting. The minutes of an open meeting during which an executive session is held must indicate the names of the members and others attending the executive session, the date and time the executive session was called to order and adjourned, a summary of the general topics that were discussed or considered that does not disclose any closed or confidential information, and the legal authority for the executive session. Participation in an executive session is limited to members of the Board, Audit Committee, SAO representatives, the Chancellor and Chancellor's staff and others, including institution officers, to whom disclosure of the closed or confidential information is required to perform duties and responsibilities. Participants in the executive session may not disclose a confidential audit report or other confidential information or discussion in the executive session regarding confidential information, except as authorized by law. All confidential records received in connection with an executive session must be kept in a locked file or other secure location. If participants record notes during the executive session, the notes are confidential and must be collected and shredded following the executive session or kept with the confidential recording. Unauthorized disclosure of confidential information, the recording of the executive session or confidential information disclosed in the executive session is a violation of NDCC section 12.1-13-01, which is a Class C felony.

1. INTRODUCTION: Internal Auditing is an independent and objective assurance and consulting activity that is guided by a philosophy of adding value to improve the operations of the North Dakota University System (NDUS). It assists NDUS in accomplishing its objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of the organization's governance, risk management and internal control. 2. ROLE: The internal audit activity is established by the State Board of Higher Education (Board). The internal audit activity’s responsibilities are defined by the Board and the Audit Committee as part of their oversight role.

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3. PROFESSIONALISM: a. The internal audit activity will govern itself by adherence to The Institute of Internal Auditors' mandatory guidance including the Definition of Internal Auditing, the Code of Ethics, and the International Standards for the Professional Practice of Internal Auditing (Standards). This mandatory guidance constitutes principles of the fundamental requirements for the professional practice of internal auditing and for evaluating the effectiveness of the internal audit activity’s performance. b. The Institute of Internal Auditors' Practice Advisories, Practice Guides, and Position Papers will also be adhered to as applicable to guide operations. In addition, the internal audit activity will adhere to relevant Board policies and procedures and the internal audit activity's standard operating procedures manual. 4. AUTHORITY: The internal audit activity, with strict accountability for confidentiality and safeguarding records and information, is authorized full, free, and unrestricted access to any and all NDUS (and affiliated organizations) records, physical properties, and personnel pertinent to carrying out any engagement. All NDUS (and affiliated organizations) employees are requested to assist the internal audit activity in fulfilling its roles and responsibilities. The internal audit activity will also have free and unrestricted access to the Board and Audit Committee. 5. ORGANIZATION: The Chief Auditor (CAE) will report functionally to the Board and administratively (i.e. day to day operations) to the Chancellor. a. The Board and Audit Committee will: i. Approve the internal audit charter. ii. Approve the risk based internal audit plan. iii. Approve the internal audit budget and resource plan. iv. Receive communications from the CAE on the internal audit activity’s performance relative to its plan and other matters. v. Make decisions regarding the appointment and removal of the CAE. vi. Recommend and approve the remuneration of the CAE. vii. Make appropriate inquiries of management and the CAE to determine whether there is inappropriate scope or resource limitations. b. The CAE will communicate and interact directly with the Board and Audit Committee, including in executive sessions and between Board meetings as appropriate. 6. INDEPENDENCE AND OBJECTIVITY: a. The internal audit activity will remain free from interference by any element in the organization, including matters of audit selection, scope, procedures, frequency, timing, or report content to permit maintenance of a necessary independent and objective mental attitude. b. Internal auditors will have no direct operational responsibility or authority over any of the activities audited. Accordingly, they will not implement internal controls, develop procedures, install systems, prepare records, or engage in any other activity that may impair internal auditor’s judgment. 6

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c. Internal auditors will exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Internal auditors will make a balanced assessment of all the relevant circumstances and not be unduly influenced by their own interests or by others in forming judgments. d. The CAE will confirm to the Board, at least annually, the organizational independence of the internal audit activity. 7. RESPONSIBILITY: The scope of internal auditing encompasses, but is not limited to, the examination and evaluation of the adequacy and effectiveness of the organization's governance, risk management, and internal controls as well as the quality of performance in carrying out assigned responsibilities to achieve the organization’s stated goals and objectives. This includes: a. Evaluating risk exposure relating to achievement of the organization’s strategic objectives. b. Evaluating the reliability and integrity of information and the means used to identify measure, classify, and report such information. c. Evaluating the systems established to ensure compliance with those policies, plans, procedures, laws, and regulations which could have a significant impact on the organization. d. Evaluating the means of safeguarding assets and, as appropriate, verifying the existence of such assets. e. Evaluating the effectiveness and efficiency with which resources are employed. f. Evaluating operations or programs to ascertain whether results are consistent with established objectives and goals and whether the operations or programs are being carried out as planned. g. Monitoring and evaluating governance processes. h. Monitoring and evaluating the effectiveness of the organization's risk management processes. i. Evaluating the quality of performance of external auditors and the degree of coordination with internal audit. j. Performing consulting and advisory services related to governance, risk management and internal control as appropriate for the organization. k. Reporting periodically on the internal audit activity’s purpose, authority, responsibility, and performance relative to its plan. l. Reporting significant risk exposures and control issues, including fraud risks, governance issues, and other matters needed or requested by the Board. m. Evaluating specific operations at the request of the Board or Chancellor, or institution presidents, as appropriate. 8. INTERNAL AUDIT PLAN: a. At least annually, the CAE will submit to the Chancellor, institution presidents, and the Board an internal audit plan for review and approval. The internal audit plan will consist of a work schedule as well as budget and resource requirements for the next fiscal year. The CAE will communicate the impact of resource limitations and significant interim changes to the Chancellor, institution presidents, the Board, and Audit Committee.

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b. The internal audit plan will be developed based on a prioritization of the audit universe using a risk-based methodology, including input of the Chancellor, institution presidents, and the Board. The CAE will review and adjust the plan, as necessary, in response to changes in the organization’s business, risks, operations, programs, systems, and controls. Any significant deviation from the approved internal audit plan will be communicated to the Chancellor, institution presidents, the Board, and Audit Committee through periodic activity reports. 9. REPORTING AND MONITORING: a. A written report will be prepared and issued by the CAE or designee following the conclusion of each internal audit engagement and will be provided to the Chancellor and appropriate institution president(s). b. Internal audit results will also be communicated to the Board and Audit Committee. c. The internal audit report may include management’s response and corrective action taken or to be taken in regard to the specific findings and recommendations. Management's response, whether included within the original audit report or provided thereafter (i.e. within thirty days) by management of the audited area should include a timetable for anticipated completion of action to be taken and an explanation for any corrective action that will not be implemented. d. The internal audit activity will be responsible for appropriate follow-up on engagement findings and recommendations. All significant findings will remain in an open issues file until cleared. e. The CAE will periodically report to the Chancellor, institution presidents, the Board, and Audit Committee on the internal audit activity’s purpose, authority, and responsibility, as well as performance relative to its plan. Reporting will also include significant risk exposures and control issues, including fraud risks, governance issues, and other matters needed or requested by the Chancellor, institution presidents, the Board, and Audit Committee. 10. QUALITY ASSURANCE AND IMPROVEMENT PROGRAM: The internal audit activity will maintain a quality assurance and improvement program that covers all aspects of the internal audit activity. The program will include an evaluation of the internal audit activity’s conformance with the Definition of Internal Auditing and the Standards and an evaluation of whether internal auditors apply the Code of Ethics. The program also assesses the efficiency and effectiveness of the internal audit activity and identifies opportunities for improvement. The CAE will communicate to the Chancellor, institution presidents, the Board, and Audit Committee on the internal audit activity’s quality assurance and improvement program, including results of ongoing internal assessments and external assessments conducted at least every five years.

History: New Policy. SBHE Minutes, November 4, 2010. Amended. SBHE Minutes, September 26, 2012.

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Amended. SBHE Minutes,

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Summary of Proposed Action February 27, 2014, SBHE Meeting

1. Issue: Proposed SBHE policy concerning appropriated funds reserve. 2. Proposed motion: Motion to approve SBHE Policy 810.1 – Reserve Funds. 3. Background information: Colleges and universities are strongly encouraged to maintain an appropriated (e.g. general fund and tuition income) reserve balance. Reserve funds are needed: 1) to protect against sudden shortfalls in revenue, (e.g., unforeseen enrollment decline or reduction in state appropriation; 2) to cover unanticipated significant expenses (e.g., one-time legal fees, major disasters, increases in utility costs); 3) ability to plan for one-time initiatives; and 4) to obtain strong accreditation scores and bond ratings. Accrediting bodies, such as the Higher Learning Commission and national credit rating agencies, such as Standard and Poor’s or Moody’s, look at an institution’s reserves as one measure of financial health. These are important measures in maintaining access to federal financial aid, lower bond costs, and competitive academic programs. Consistent with national best practices, a new policy to create an appropriated fund (general fund and tuition income) reserve is recommended. The reserve would have two components: 1.) Undesignated – by June 30, 2014, target creation of a reserve of between 5-7% of the previous fiscal years’ actual general fund and net tuition revenue (it should be noted that 5-7% is roughly equivalent to 1.5 payrolls); 2.) Designated reserve balance beyond seven percent would be classified by the institution in one of the following categories: o Instructional and academic support o Recruitment and retention o Strategic planning initiatives o Safety/security o Accreditation o Student services and marketing o Technology o Equipment o Capital projects, including deferred maintenance o Debt service o Sustainability Campuses would be required to report if they do not meet the five percent minimum or intend to reduce its reserve below three percent.

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A target of 5-7% is recommended at this time, due to the unknown transitional impact of the Pathways Plan on tuition revenues. It also provides adequate time for campuses to achieve the five percent minimum, where not currently available. The intent would be to require a specified level of appropriated fund reserves in the future. 4. Financial implications: Will require internal reallocation of funds overtime to create, at a minimum, an undesignated reserve balance at those campuses where it does not currently exist. 5. Legal and policy issues: None 6. Review process: • Recommended for approval by the Admin. Affairs Council on November 19, 2013 • Recommended for approval by the Chancellor’s Cabinet on February 12, 2014 • Chancellor’s Senior Staff 7. Enclosures: • Draft SBHE Policy 810.1 8. Chancellor’s recommendation: Recommend approval.

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NORTH DAKOTA STATE BOARD OF HIGHER EDUCATION POLICY MANUAL SUBJECT: GOVERNANCE AND ORGANIZATION EFFECTIVE: Section: 810.1 Appropriated Funds Reserve 1. Purpose. Reserve funds are needed: 1) to protect against sudden shortfalls in

revenue (e.g., unforeseen enrollment decline or reduction in state appropriation); 2) to cover unanticipated significant expenses (e.g., one-time legal fees, major disasters, increases in utility costs); 3) ability to plan for one-time initiatives; and 4) to obtain strong accreditation scores and bond ratings. 2. Amount. a. Undesignated Reserve: By June 30, 2014, colleges and universities shall target establishing and thereafter maintain an undesignated appropriated funds (i.e. general fund and tuition) reserve of between 5-7% of the previous fiscal years’ actual general fund and net tuition revenue. b. Designated Reserve: Colleges and universities may maintain appropriated reserves in excess of seven percent. They shall be classified into one of the following “designated” categories, as determined by the college or university, and reported to the Vice Chancellor of Administrative Affairs by the end of the quarter following the close of the fiscal year: o Instructional and academic support o Recruitment and retention o Strategic planning initiatives o Safety/security o Accreditation o Student services and marketing o Technology o Equipment o Capital projects, including deferred maintenance o Debt service o Sustainability 2. Reporting. a. The institutional chief financial officer shall report a reserve below five percent at fiscal year-end to the Vice Chancellor for Administrative Affairs no later than the end of the first quarter following the close of the fiscal year. The report shall include a plan for achieving and maintaining at least a 5% reserve.

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b. A college or university planning to reduce its reserve below three percent must first notify the Vice Chancellor for Administrative Affairs in writing. Designated reserves will not be included when calculating the 5-7% undesignated reserve. c.

Information on reserve fund balances will be included in the annual financial review report provided to the State Board of Higher Education by each institution.

3. Use. Reserve funds may be utilized at the discretion of the president. Reserves shall be properly accounted for in the accounting system and use of reserve funds documented. 4. Definitions: An “undesignated reserve” is that part of an institution’s year-end appropriated fund balance, which has not yet been identified for a specific purpose. A “designated reserve” is that part of an institution’s year-end appropriated fund balance, which is identified as a reserve and is designated for use in particular areas over time and is not part of the undesignated reserve requirement. Both restricted and unrestricted reserves for funds other than the appropriated funds sources are to follow guidelines established for those funds.

HISTORY: New Policy, SBHE Minutes

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