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Ninth Biennial Convention
Augustana University College, Cambros AB
June 12 - 15, 2003

Sing to the Lord a New Song
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Augustana University College

The Chair declared the meeting of the Augustana University College Corporation in session at 2:38 pm

MS That the agenda be adopted.

CARRIED

MS That the privilege of voice be granted to the Bishops of the ELCIC at this meeting.

CARRIED

MS That the privilege of voice be granted to members of the ELCIC National Church Council.

CARRIED

MS That Roger Epp, representing Augustana Faculty and Staff; Matthew Hebert, representing Augustana students; and K. Glen Johnson, President Emeritus of Augustana, be given voice at today's General Meeting of Camrose Lutheran College Corporation.

CARRIED

Also present was Barbara Johnston, independent counsel to the Bishop.

MS To adopt the minutes of the Corporation meeting of July 2001.

CARRIED

Presentation of Report

Jackie Dojack, Chair of the Board of Regents, addressed the Convention and spoke to the Augustana University College Report found on pages H1–2 of the Bulletin of Reports.

MS That the report be adopted as presented.

CARRIED

Business Arising from the Report

MS That

  1. The Camrose Lutheran College Corporation (the "Corporation") approve the transfer of Augustana University College (AUC) to the public post-secondary system, with a preference to Augustana University College being incorporated into the University of Alberta subject to satisfactory negotiation between the two institutions and the Province of Alberta to ensure the maintenance of AUC as a degree–granting institution of learning, respecting its identity, traditions and values, and
  2. The Corporation recommend to the National Church Council of the Evangelical Lutheran Church in Canada (the "ELCIC") that it work with the Board of Regents, and the Board of Regents in turn work with the University of Alberta and the Province of Alberta to ensure that the Lutheran presence, including a strong Lutheran campus ministry, be maintained as an integral part of the program and services at AUC and to find and maintain funding as necessary for such presence and ministry, and
  3. The Corporation authorize the National Bishop of the Church, who is the President of the Corporation, to take any action upon recommendation of the Board of Regents which might otherwise require a special or general meeting of the Corporation to achieve the foregoing results, including signing an agreement negotiated between the Board of Regents, the University of Alberta and the Province of Alberta or any of them, relating to the future of AUC, and
  4. The Background attached to this Resolution be incorporated by Reference into the resolution and included in the Minutes of this meeting of the Corporation, and
  5. Nothing in this Resolution shall be interpreted as constituting the dissolution of the Corporation.

Dr. Sandra Anderson and Dr. L. Tyrrell left the meeting at the conclusion of the chair's report.

The meeting was recessed at 3:33 pm. and resumed at 3:57 pm.

MS That this matter require a 2/3 majority vote (results: Yes 174; No 139).

CARRIED

Meeting was recessed at 4:45 PM and resumed at 5:05 pm.

MS That the question of the future of this university be tabled until all congregations have a chance to study both sides.

DEFEATED

Rev Marty Tuer led the Convention in prayer. The ballots for the vote on the original resolutions were distributed.

The Corporation meeting was recessed at 5:45 and resumed at 5:55.

Report of the Committee on Elections on the resolutions concerning AUC.

Wendell Grahlman reported

Votes cast 343
Ballots spoiled 4
Yes 274
No 65
Needed to pass 229

MOTION CARRIED

Nominations to the Board of Regents

The following were nominated for positions on the Board of Regents of Augustana University College:

For re-election for a second 6-year term:

Dr. Lorne Tyrrell

For first 6-year term:

Andrew Church
Ms Lisa Munroe

The Chair called for nominations from the floor.

MS That nominations cease.

CARRIED

The Chair declared the nominees elected to the Board of Regents of Augustana University College.

Resolution of Ratification

MS That any and all actions of the Ninth Biennial Convention of the Evangelical Lutheran Church in Canada which pertain to the Corporation of Augustana University College are hereby ratified.

CARRIED

MS To adjourn

CARRIED

The Chair declared the meeting of the Corporation adjourned at 6:00 p.m.

Background Reference

Introduction

The Board of Regents of Augustana University College presents a Resolution to the Camrose Lutheran College Corporation asking the Corporation to endorse the exciting initiative of aligning Augustana University College with the University of Alberta in such a way that it ensures a stable and growing future in Camrose for Augustana University College and its students. While the exploration of this and other options began as a way to resolve the serious financial difficulties the institution faces, the Board of Regents is enthusiastic about the "window of opportunity" which has opened up with the Province of Alberta and the University of Alberta. The Board is unanimous in its belief that the outcome of the negotiations will be positive for the entire Augustana community and is consistent with the purpose "to maintain an institution of learning governed in harmony with the Christian faith as taught by the Church."

The Board of Regents is grateful for the indications of strong support it has already received from the Faculty, the Students Association, and the Alumni Association at Augustana University College and from the Camrose community, specifically from the City Council and the Chamber of Commerce, as we work together towards a renewed institution.

Origins

Augustana University College (AUC) was founded in 1913 by Norwegian immigrants in Western Canada to educate students in the Lutheran tradition, and is incorporated in the Province of Alberta under the Camrose Lutheran College Corporation Act, c. 40 of the Statutes of Alberta, assented to June 25, 1991 (the "Act"). The Act provides that all of the powers, rights, and privileges conferred upon or vested in a corporation by the laws of the Province of Alberta are vested in the Camrose Lutheran College Corporation (the "Corporation"), incorporated by chapter 77 of the Statutes of Alberta, 1913, as amended from time to time, for the purpose prescribed by the Act of establishing and maintaining an institution of learning, governed in harmony with the Christian faith as taught by the Church.

The Act specifies that the Corporation shall be administered by a Board of Regents (the "Board") in whom the powers conferred upon the Corporation are vested, including:

  1. the full power to manage the affairs of the Corporation;
  2. the power to make by-laws and regulations for the orderly functioning of the Corporation;
  3. the power to adopt the by-laws and resolutions by which all business and affairs of the Corporation shall be conducted;
  4. the power to fill any vacancy on the Board until the next meeting of the members of the Corporation; and
  5. the full power to supervise the curriculum and instruction of the Corporation.

The Act further provides that all congregations of the Evangelical Lutheran Church Canada or its successors (the "Church") shall be members of the Corporation which shall meet in a general meeting at the same time and place as the general meetings of the Church. The Bishop of the Church is the President of the Corporation and designated by the Act as a non-voting advisory member of the Board. Although not addressed in the Act, the Bishop of the Alberta Synod of the ELCIC also attends Board meetings in an advisory capacity, as do representatives of AUC's faculty, staff, students, and alumni.

Thus AUC is an educational institution with close historical and statutory ties to the ELCIC.

AUC's Financial Predicament

For some considerable time, AUC has been suffering from a poor financial situation made chronic and precarious by a heavy debt load combined with emerging financial pressures. Specifically, AUC needs to contend with:

  1. bank debt at May 31, 2002, of approximately $5.3 million dollars, consisting of capital debt dating before 1996 and accumulated operating deficits held primarily as demand loans;
  2. long deferred maintenance and repair projects, estimated at $2 million in the next five years, and an additional $1.3 million in the five years following that, which are causing concern to the holders of the securities and mortgages as the mortgaged physical structures deteriorate;
  3. the inability to appropriately compensate faculty and staff;
  4. rapidly escalating fixed expenses, such as insurance and utilities;
  5. the government's funding formula for eligible private post-secondary institutions that limits Augustana's funding to 75% of that received by public institutions per student with a cap on per student grants which eliminates most grant revenue for all students over the first 750 students; and
  6. a chronic shortfall of operating revenue (gifts, tuition, grants) as compared with needed expenditures.

The continuing difficulties in meeting immediate operating financial needs precludes any possibility of undertaking fundraising efforts for new major projects to meet longstanding needs, or to replace aging facilities, or to expand programs to meet the evolving needs of the community. This situation has very serious long-term consequences.

As a result, AUC faces difficulty in balancing its operating budgets in the next three years, let alone in addressing its debilitating debt, without further serious erosion to faculty and staff salaries and to the academic, athletic and performance programs that make AUC the unique institution it is today.

The Board and the ELCIC have long been in communication about what the ELCIC's responsibility would be should AUC's situation worsen, and in 1996, the ELCIC received legal advice that if AUC were to declare bankruptcy, the ELCIC would have at most political, but not legal liability or responsibility to secured or unsecured creditors of the Corporation.

It is expected that secured and unsecured creditors would look first to the Corporation and then potentially to its members, which are the congregations of the ELCIC, when attempting to assign legal liability for AUC's debts.

The legal advice the ELCIC was given in 1996 appears consistent with the constituting documents of both the ELCIC and AUC in that

  1. the Evangelical Lutheran Church in Canada Act, being c. 55 of 33–34 Elizabeth II, is silent about the ELCIC's relationship with educational institutions and does not provide that the ELCIC "owns" AUC;
  2. the Act does not make any provision for ownership either, except to provide in section 12 that, in the event of its dissolution, all of the assets of the Corporation in excess of liabilities shall be transferred to the Church. It is silent on liability and does not transfer the liabilities away from the Corporation.
  3. the ELCIC Constitution, as amended to July 7, 2001, provides that the ELCIC shall "recognize independent Lutheran organizations and institutions established for Christian education…as approved by the National Church Council" (Art. XVII, s. 3); and
  4. the ELCIC Administrative Bylaws, as amended to July 7, 2001, provide, without naming AUC, that "the ownership of the colleges and universities of this church shall be vested in this church in corporations whose membership shall be the same as that of the conventions of this church" (Part XI, s. 1)

The ELCIC was not in 1996 and is not now in a position to provide financial support at any level approximating that which would be required to enable to AUC to resolve its systemic financial difficulties. In addition, the ELCIC Strategy for Stewardship 2000–2005 does not include AUC, and the ELCIC cannot now assume the financial responsibility or liability for AUC that one would expect of an "owner".

By contrast, the Board does have the statutory authority and responsibility to maintain the institution. The Board is faced with providing for the management of the affairs of the Corporation in a situation of significant financial difficulty while maintaining AUC as an institution of learning, governed in harmony with the Christian faith as taught by the Church.

The Board has concluded that AUC will not be able meet its financial obligations in the future, given the current and foreseeable sources of revenue available to manage the affairs of the Corporation, and that AUC should no longer move forward on its own as an independent institution.

The Future of AUC

As a result, the Board has been searching for new institutional relationships and alliances in order to secure the future existence of AUC, keeping to certain principles we all value, including

  1. that AUC will remain in Camrose as a degree-granting institution dedicated to serving all its students with a distinctive liberal arts education in the context of a small campus,
  2. that the Lutheran presence and ministry will be provided for,
  3. that students' access to their programs will be protected during the transition period,
  4. that faculty and staff will be treated fairly and equitably during and after the transition period, and
  5. that funding and debt issues will be resolved.

With those and other points in mind, the Board has over time evaluated a number of options including:

  1. Continuing the Status Quo. This option would require a major infusion of capital from private sources, traditionally the ELCIC and its core supporters, in excess of $6.6 million dollars so as to eliminate the long-term debt and to fund the long list of now urgent major repairs and ongoing operating expenses. Most public companies and foundations will not fund private religious institutions and cannot be regarded as a source of making up the shortfall in major funding needed. The Alberta government has ruled out significant one-time or ongoing funding. Such major restructuring of the institution's programs and staff would be required to put AUC on a stable footing that AUC would become unrecognizable. The option of maintaining the status quo, however modified, has been deemed unrealistic.
  2. Orderly Shutdown of AUC. This option would see the proceeds of any net assets transferred to the ELCIC, but as all physical facilities are mortgaged to the limit, there are likely few, if any, assets in excess of liabilities. The Board has rejected this option as it would represent a betrayal of AUC's historical, present and future supporters, students, faculty, and staff whose vision of AUC is that of an institution which would continue to address the educational needs of the communities it serves.
  3. Conveyance of AUC to a local entity, such as a foundation. This option would see AUC become an independent, public institution of the Camrose and area community, able to preserve its identity and values. However, this option does not fit any model that would likely be acceptable to the Province of Alberta, and no local entity able or willing to accept ownership and responsibility has been identified.
  4. Merger between Red Deer College and AUC. Preliminary soundings with Red Deer College, a public institution currently without degree-granting status, were positive. An ideal outcome under this scenario would have been the creation of a new University of Central Alberta, with campuses in both Red Deer and Camrose. This option would mean transfer to the Province of Alberta, and would require significant further negotiating with the Provincial Minister of Learning.
  5. Federated College. This option is similar to that of Luther College in Regina, but does not seem suitable for AUC because it would not address the debt problem nor provide a basis for obtaining capital funding. AUC's location in Camrose also makes it too remote from other institutions for the federation model to work effectively.
  6. Conversion of AUC into an independent, fully-funded public degree-granting institution. In this option, ownership and responsibility would be transferred to the Province of Alberta. However, major restructuring of all facets of the institution would be required, and all indications are that the Alberta government is not supportive of simply providing full funding for AUC.
  7. Sale of educational services to the Province of Alberta. This option would see a long-term contract under which AUC would "sell" educational services at the undergraduate level back to the Alberta government at a price which would fully compensate AUC for the costs of providing the service (the Public Private Partnership or "P3" model). There is, however, no assurance this would address the debt in a timely manner, nor that the province is interested in pursuing this as an option.
  8. "Lease to own" arrangement. This option would be entered into with the Province of Alberta, with the province leasing Augustana's facilities over a period of years and eventually assuming ownership. As a result, the province would determine programming at an early stage. Like (g), this option would not address the debt.
  9. Conveyance of AUC to the Province of Alberta. The Alberta government would operate AUC under a form of receivership for one year or more, then transfer the institution to one of the existing public universities interested in taking it over. The Minister of Learning for Alberta raised this model, based on that which was used when Alberta College transferred from the private to the public system. Officials have indicated that they would provide reasonable assurances that the identity and essential values of AUC would be protected and specifics would be negotiated.
  10. Conveyance of AUC to the University of Alberta. This option would be analogous to the Faculté Saint Jean model, with good assurance that AUC's identity and essential values could be maintained. AUC's programs would be enriched by those offered by the University of Alberta, and the AUC campus would award University of Alberta degrees with Augustana identification.

The Board believes that option (j) offers the exciting possibility of a stable and growing vision for the future of AUC, which is positive for the entire AUC community and is consistent with its purpose "to maintain an institution of learning governed in harmony with the Christian faith as taught by the Church."

Over the past several months, there have been a number of three-way discussions between the Province of Alberta, the University of Alberta, and AUC. The University of Alberta has shown keen interest in a common future with AUC. Representatives of University faculty, staff, and administration have visited Camrose for in depth discussion with their AUC counterparts. The Board is pleased at reports of the very positive nature of those exchanges and the many acknowledgments of respect for what AUC is and has been doing over the years.

At its meeting on May 10–11, 2003, the Board established a Transition Advisory Committee, with representatives from the faculty, staff, students, alumni, and administration. This committee will advise and assist the Board in negotiating and implementing the future vision for AUC. The Transition Advisory Committee will begin its tasks at an early time after receiving the endorsement of the Corporation.

Conclusion

With the support of Augustana's Faculty, Students' Association and Alumni Association for a long-term solution that will stabilize AUC, the Board now seeks to move forward in harmony with the Corporation and the Church to sustain and enhance the purpose and historical excellence of AUC. Further, the Board wishes to ensure the institution is as free as possible from the financial stresses and liabilities which are hampering its continued development, and currently threaten its future existence. The Board believes that negotiations will be most beneficially concluded once the Province of Alberta and the University of Alberta have the assurance that the Corporation, and through it the ELCIC, endorse the directions initiated by the Board.

To that end, the Board offers the Resolution to the Corporation for its approval.

Respectfully submitted,

Donald Storch, Secretary

In full communion with The Anglican Church of Canada
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