A meeting of the Finance Committee of the Board of Trustees convened at 8:28 a.m. CDT on Friday, April 6, 2018, in the Great Hall of the Dworkin Student Services and Activities Complex on the Westville, Indiana, campus of Purdue University Northwest.

All committee members were present: Don Thompson, chair; Sonny Beck; Vanessa Castagna; and Michael Klipsch. All other trustees were present: Michael Berghoff; JoAnn Brouillette; Malcolm DeKryger; Gary Lehman; Daniel Romary; and Thomas Spurgeon.

Officers and administrators in attendance were: Mitch Daniels, president; Jay Akridge, provost and executive vice president for academic affairs and diversity; Bill Sullivan, treasurer and chief financial officer; Steve Schultz, legal counsel; Janice Indrutz, corporate secretary and executive assistant to the Board; Ron Elsenbaumer, chancellor of Purdue University Fort Wayne (PFW); and Tom Keon, chancellor of Purdue University Northwest (PNW).

I. APPROVAL OF MINUTES

Upon proper motion duly made and seconded, the Committee voted unanimously to approve the minutes of its last meeting convened on February 9, 2018.

II. APPROVAL OF FY 2019 BUDGET

Trustee Thompson reminded everyone that the FY 2019 budget took into account the tuition and fee schedule that the Board had previously approved in May 2017, which included a sixth-year tuition freeze for the West Lafayette campus and 1.4% tuition increase for each regional campus. He thought it was important to note that the budget was being presented for approval six months earlier than in previous years, which, he said, was impressive. He attributed this to the cultural and business process changes made thus far as part of the business process reengineering the university was undergoing.

Trustee Thompson then deferred to Mr. Chris Ruhl, senior vice president for strategic initiatives in the Office of the Treasurer, who provided an overview of the goals and objectives for the budget. Mr. Ruhl expressed his pride in being able to invest in strategic priorities and provide a competitive merit compensation pool all while maintaining student affordability. He said he was pleased to share the results of the process improvements and simplification with the Committee. Ms. Eva Nodine, senior director of financial planning and analysis, then provided an overview of the steps taken to change the financial culture and streamline the budget process. She explained that very manual, very paper-based processes had been transformed into online, automated processes, which had allowed the budget work to be completed in three months versus eight months.

Ms. Nodine identified the three categories that made up the total operating budget, and she outlined the key assumptions considered during the budget process. These included assumptions for the regional campuses, which she commended for their efforts to both balance their budgets and adapt their practices and policies to those of the West Lafayette campus. Ms. Nodine illustrated operating revenue, operating expenses, and the drivers of both, and she provided a snapshot of the $73,228,000 budget, both for the system and by campus.

Trustee Castagna recognized and thanked the regional campuses for their efforts to integrate and convert processes over the last few years. Trustee Thompson added that the improvement processes and collaboration across the system had clearly supported student affordability and academic excellence. At the request of President Daniels, Provost Akridge commented that the streamlined budget process had been well received by the colleges and faculty.

Upon proper motion duly made and seconded, the Finance Committee voted unanimously to recommend full Board approval of the FY 2019 budget. A copy of the budget presentation was filed with the minutes.

III. APPROVAL OF AMENDMENT TO AUTHORIZATION LIMIT ON SAP PROJECT

Trustee Thompson reminded the Committee that, upon its recommendation, the Board had previously approved a major investment for the business transformation project with an original budget of $25,000,000, which they had believed was aggressive and conservative. He informed the Committee that the costs for the project had increased by approximately $8,500,000, for a total projected cost of $33,500,000. Trustee Thompson expressed his belief that the projected savings would increase more than commensurately with the increased costs, which, he said, meant that the return on investment would be even better than what was originally projected.

Trustee Thompson then called on Treasurer Sullivan to explain the reasons for the budget increase. Treasurer Sullivan first accepted full responsibility for the budget increase, which, he said, was the result of scope changes and delays. He described how the implementation of the asset management system had driven many synergies, and he informed the Committee that there would be a one-year delay in implementing the human capital management system.

Trustee Klipsch remarked that he had personally been involved in many such projects, all which had gone over budget. Therefore, he said, the budget increase was not shocking nor atypical, and he believed it was important to note that the new issues discovered during the project would be addressed. Trustee Castagna commented that the project would bring the university into the 21st century and set up the university for years to come. In response to questions from Chairman Berghoff and Trustee Thompson, Treasurer Sullivan said the biggest piece of the budget was the number of technical consultants needed to build the system, and Purdue would be the first university to be cloud-based. Treasurer Sullivan added that the number of funds would be reduced from 47,000 to 62, which, he said, would create a dramatically simpler chart of accounts and provide for more consistent reporting. He also discussed lessons learned from the implementation of SAP in 2006 and expressed his belief that the project would make Purdue University the “poster child for efficiency.” Finally, to put the current paper-based system into perspective, Treasurer Sullivan informed the Committee that the amount of paper used in a one-year period equaled one and one-half times the height of the clock tower.

President Daniels commented that the business transformation was also about people. He expressed his belief that staff members would be much better at their jobs and said there was “nothing sadder in life than a good person doing a good job and working very hard at something that did not need to be done at all.” He explained that the project was removing useless work that would free up staff members to do important things for Purdue.

To conclude the lengthy discussion, Trustee Thompson reminded the Committee members that the request before them was approval to amend the authorization limit for the SAP project from $25,000,000 to $33,500,000 so that the team could continue and complete the project. Upon proper motion duly made and seconded, the Finance Committee voted unanimously to recommend full Board approval to amend the authorization limit. A supporting document and a copy of Treasurer Sullivan’s slide were filed with the minutes.

IV. ADJOURNMENT

By consent, the meeting adjourned at 8:56 a.m. CDT.