October 23, 1988

Executive Committee of the American Institute of Physics

Minutes of Meeting

1. Convene – Roll Call

The meeting was convened by Chairman Frauenfelder at 1:00 p.m., 23 October 1988, in the Tarrytown Ballroom, Salon 1, of the Westchester Marriott Hotel.

Members Present:
Hans Frauenfelder, Chair
Peter B. Boyce
Kenneth W. Ford, Executive Director
Roderick M. Grant, Secretary
William W. Havens, Jr.
F. Dow Smith
Martin Walt
Jack M. Wilson

Members Absent:
David Lazarus
James A. Purdy

Non-voting Participant:
Robert T. Beyer
William L. Duax (from 2:45 p.m.)

Robert E. Baensch, Director of Publishing
Gerald F. Gilbert, Treasurer
John S. Rigden, Director of Physics Programs
Timothy C. Ingoldsby, Director of Information Technology
Paul A. Parisi, Manager, Special Projects
Nathalie D. Wagner, Assistant to the Secretary

For clarity in presentation with reference to the printed agenda, events recorded here are not necessarily in the same chronological order in which they appeared.

2. Report of the Secretary
Grant reported that draft minutes from the September meeting are not ready for review.

3. Report of the Chair
Frauenfelder noted that there would be a report on the Gordon & Breach complaint regarding Barschall's articles in Physics Today.

4. Report of the Executive Director

  1. Retirement of Gerald F. Gilbert and

  2. Recruitment of New Treasurer
    Ford noted the impending retirement of Gilbert, referring to his 13 October 1988 memo to the Executive Committee and to Gilbert's 3 October 1988 memo to Frauenfelder and Ford stating his intention to retire. He said Gilbert has been generous in agreeing to postpone the date until the end of March 1989, by which time Ford said it should be possible to find a replacement.

    Gilbert responded that AIP has been good to him, and that he will miss the people here at AIP. He wants to make sure that the staff he leaves behind are treated properly. In response to an inquiry from Frauenfelder, Gilbert confirmed that he will be available for consultation as needed.

  3. Reorganization of Activities within AIP

    1. Organizationally

    2. Geographically
      Ford referred to his 17 October 1988 memo to the Executive Committee which summarizes the organizational changes recently made.

      In the Finance and Administration Branch, the head of Personnel has been elevated to branch head level, with the new title of Director of Human Resources.

      In the Publishing Branch, a new position, Director of Journal Publishing, has been created. Publishing II Division is renamed Publishing III, but its function serving APS publications will not change. Publishing I is divided into Publishing I (editorial and production work) and Publishing II (composition and makeup).

      Grant said he is distressed over the continued placement of Computers in Physics under the publishing operations of the Institute. The advisory committee said it should be viewed as under Physics Programs. He thinks there is still a deep misconception within AIP of what the journal should be, and suggested going back to this report.

      Baensch said he has formed a small task force and will be meeting with Borchers this week. The target is to have an editorial board meeting by January to review positioning of the journal, both in the community and in AIP. Due to the financial situation (expenditures have exceeded the projections) he has set in motion efforts to cut costs and to improve editorial content.

5. Financial Matters

  1. Financial Statements for Six Months Ended 30 June 1988
    Gilbert distributed the statement of revenue and expense and the balance sheet for this period.

    The statement of revenue and expense shows 1988 budget figures, plus a comparison of the first six months of 1988 with the comparable period for 1987. Total Operating Revenue to date in 1988 was $11,844,017 compared to $10,447,389 in 1987. Increased revenue from Subscriptions of $740,000 is the result of increased subscription rates. Total Operating Expense in 1988 was $12,581,725 compared to $10,935,989 in 1987, with Publishing Operations Expenses accounting for about $900,000 of the increase. This results from two factors: Computers in Physics expense of $450,000 for first six months, and an additional 1,600 pages to be published in archival journals. Advertising Sales increased about $325,000 in 1988 (a timing condition). General and Administrative Expense increased about $500,000, due mainly to development cost of $400,000 for the new subscription fulfillment system. Excess of Operating Revenue in 1988 is $737,708, while the budgeted figure for the year is $1,310,000. Net Investment Revenue for 1988 is $1,096,913. Approximately $434,000 is short-term investment revenue, and $663,000 represents long-term investment revenue. He cautioned that experience shows that the results for the first six months are not indicative of the year, as most activity is in the latter half.

    Gilbert next reviewed the balance sheet, reviewing the format and the fund groupings. Cash in Operating Fund in amount of $8,877,806 represents the funds in the cash management account. This amount plus Accounts Receivable and the amount Due for Member Societies total $12,581,591, which is offset by Deferred Income and Deferred Subscription Income, as listed on the Liabilities and Fund Balances sheet in the amount of $1,072,598 and $11,906,465. Restricted Funds in the amount of $56,951 represents short-term cash investments in Special Purpose Funds investment accounts. Accounts Receivable ($2,165,469) consists mainly of two elements: 1) page charges, advertising sales, and reprint sales, totaling about $1,168,000; and 2) $997,000 includes work performed for DOE and FIZ contracts, Soviet royalties due us, and grants, the monies for which will be received subsequent to 30 June.

    Property, Plant, and Equipment ($46,966,928) represents book value. Equity is shown under Liabilities and Fund Balances in column entitled Property, Plant, and Equipment Fund. The total $6,966,928.

    Long-term investments ($18,973,292) are marketable securities carried at cost, except where a permanent impairment in the value has been determined. Under Fund balances, the Unrestricted Board Designated Funds for Special Purposes amounts to $16,284,831.

    Total assets: $40,964,551. Equity in Total Assets is vested in two parties: Outside creditors represented by Total Liabilities totaling $17,986,499, and the Institute's equity represented by Total Fund Balances totaling $22,978,052.

    He noted that Touche Ross changed no figures in their audit. This is a strong balance sheet. Everything here is at cost, including the land at 335 E. 45th.

  2. Report on New Budgeting: Procedures
    Gilbert reported that the budget is now computerized. As of this date everything is going smoothly.

  3. Treasurer's Report on Pending Issues

    1. IRS Case
      Gilbert noted the synopsis contained in the Governing Board material. He has been in touch with Lehrfeld, who has heard nothing from the IRS. He considers this a good sign and is optimistic about the eventual outcome.

    2. Unrelated Business Income Tax (UBIT)
      Gilbert said everyone is watching this closely. Some not-for-profits are looking at the idea of forming for-profit subsidiaries to channel in profits from their not-for-profit activities. He is not sure if this is a good idea. Congress will be aware of this loophole and will put restrictions on it. He thinks, in any case, we will not continue to enjoy the low UBIT we have had up to now.

    3. Agreements with Subscription Agencies: Faxon and EBSCO
      Gilbert said a new agreement for 1989 has been concluded recently with Faxon covering non-member renewals. They will send us renewals as soon as possible; we treat them as "paid as billed." In February Faxon will wire transfer the funds, with interest. Billing with them for 1989 is about $9 million.

      He recently received a call from EBSCO (Alabama), the second largest U. S. subscription agency. We do $4 million in business with them annually. He thinks this is a reliable company, and is getting a Dun and Bradstreet reading on them. If this is satisfactory, he requests authorization to enter into an agreement with EBSCO similar to the Faxon agreement.

      Grant thought that formal approval was not necessary, as a precedent has been established with our relationship with Faxon. The committee concurred with this interpretation.

    4. Investments with Drexel Burnham Lambert (DBL)
      Wilson said the Governing Board agenda contains a report of the Investment Advisory Committee. He noted our continuing investment in an arbitrage account with DBL, and on moral grounds, stated that he does not think that AIP should be involved in these investments with DBL. [Clarification of previous actions (March 1987 Governing Board and mail ballot in April 1987): Two motions were passed regarding this issue. Relative to the first motion, Gilbert, after consultation with the Chair of the Investment Advisory Committee, moved all AIP securities held by DBL to Bankers Trust. This action was sustained in a telephone ballot of the Executive Committee. The Investment Advisory Committee reviewed the Governing Board motions and recommended to the Executive Committee that the motion requesting transfer or liquidation of the DBL arbitrage account not be approved. This recommendation not to approve the action was sustained by the Executive Committee in its 7-8 June 1987 meeting.]

      Gilbert noted that the Institute did well with this investment this year; we received $97,000 in capital gains. He understands the concerns which were expressed here, and will take them to the Investment Advisory Committee.

6. Gordon & Breach Complaint
Ford noted the exchange of letters between attorneys for Gordon & Breach Science Publishers and AIP. He distributed a draft statement regarding this matter that is proposed to appear in the November issue of PT. The three (APS, AIP, insurance company) attorneys' opinion is that it is in our best interest to publish such a statement. A preferable course would be the publication of a longer statement, which he and Lubkin would sign, for which we would get a signed release of all claims from Gordon & Breach.

Frauenfelder said we should take a long-range view. He is very leery of settling, as this is a problem that could come up again. No errors in the articles or surveys they cited have been identified; there is no question of a possible retraction.

Havens commented that he understands the attorneys think it is important to let the public know there is an objection to this article under discussion.

Further discussion left it up to Ford to discuss with AIP attorney the wording of the statement, and the matter of its publication, subject to the impending deadline for receipt of copy for this issue of PT.

7. Physics Program Matters

  1. Status of Education Division in Washington
    Rigden reported that this Division is moving into the new space in Washington. Colombia Barrosse has been made assistant to Kirwan and five people have been hired and are undergoing training. Two staff positions are still vacant.

8. Information Technology Matters

  1. PI-NET Budget
    Ingoldsby distributed the Proposed PI-NET 1989 Budget and projections for 1990 and 1991. PI-NET will become a chargeable service about 3/15/89, so this is part of the 1989 budget. He reviewed the 1989 budget figures and assumptions as distributed. He is recruiting for a PI-NET product manager whose task it will be to will help increase sales. The present level of users is 400; they project 800 users. The 1990 budget projection is based on an assumption of achieving a ten-fold (10x) increase in connect hours. The budget shows a net expense of $402,865. Beyer noted that the telecommunications figure was not correct: it should be $42,400, raising the total to $405,865.

    Frauenfelder asked how realistic is an increase of 10x is over the next years. Ingoldsby said he thinks the key to success is the continual addition of enhanced services. The staff and advisory committee have identified a number of services which should enhance its value. Ford added that 10x is optimistic, but this is what it will take to make it break even.

    Smith asked at what stage a decision can be made regarding the viability of this project. Ingoldsby said at the end of 1989, if we are not on target by then.

    Ford agreed. Mid-1990 could be a decision point, in time for the 1991 budget. He said PI-NET has a substantial threshold effect. It is necessary to make an investment to get up to a level of services in order to make judgments.

    Frauenfelder said the trend in electronic publishing is uncertain, and we need to maintain our position as it evolves. If we dropped this now, a commercial publisher would step in; we should be involved.

9. Publishing Matters

  1. FIZ Agreement
    Baensch had the opportunity to meet with FIZ officials while in Frankfurt and felt the time spent with them was very productive. They told him there are two current problems: 1) Economic. The German government has been given permission to re-enter space research, so there are budget concerns. 2) Their data are on two platforms: Siemens and IBM. They want to move it all to only one platform, but there are complications. He expects to hear from them in November after they have dealt with necessary internal budget revisions. He envisions a closer cooperative relationship between AIP and FIZ in the future.

  2. Multiple Subscriptions at Member Rates
    Parisi said 600 people who subscribe to six or more journals have been identified. The list has been sent for review to several Member Societies, and all but OSA have replied. He would like to send the letter once he has heard from all societies. He said the AIP letter is designed to draw the attention of members to the purpose and abuse of the spirit of the law.

    Grant cited an article in a recent publication of the Council on Undergraduate Research which contains data on library budgets for undergraduate physics departments; the annual budgets for physics and astronomy acquisitions ran from $3,000 to $24,000. His institution (Denison University) has a budget of about $15,000 and takes 39 journals. They have a few on member subscriptions that have light usage but which they think should be available to their students. If they shifted all journals to nonmember subscription rates their budget would go from $15,000 to $20,000; the result would be the cancelling of several journal titles.

    Ford noted the proposed letter includes a reference to Barschall's article. We have to decide whether or not to leave in this reference.

    Havens made the following motion, which after discussion was seconded by Walt, amended by consent, and CARRIED.

    MOVED that the letter to be sent to member subscribers to more than six AIP journals be approved in the form that has been endorsed by all of those Member Societies that have responded.

  3. IOP Agreement
    Baensch said that while in Frankfurt he met with IOP staff regarding their marketing of AIP publications. He learned that CRC Press had made a comprehensive proposal to them for marketing IOP publication in the U. S. and Canada in 1989. Baensch got approval from Ford to make a similar proposal to them, which he has done. Negotiations are now underway. He thinks it would be too bad to have IOP's list move into the commercial sector.

10. Human Resources Matters

  1. Naming of Director of Human Resources
    Ford said the change of title of Head of Personnel to Director of Human Resources reflects the many responsibilities of Braun.

  2. Follow-up to Employee Survey

  3. Consultant on Compensation and Other Personnel Matters
    Ford noted that AIP Management brought in an outside firm in September 1987 to do an employee survey. Following this he appointed a committee (all non-supervisory) on personnel matters. This group has met regularly and has come up with some additional recommendations. Management wants to start taking positive steps with supervisors; it will be relatively easy to respond to many of the concerns. The background of the discussions is still compensation; we are lower than comparable organizations. The labor rates have increased in Long Island, and AIP is not keeping pace. They are now seeking a consultant regarding market rates; several bids have been received. This study would cost about $25,000. He hopes for a plan from them to move AIP into a competitive picture. They anticipate being ready early in 1989 to make recommendations on restructuring salary levels and reducing the number of grades.

11. Space Issues

Gilbert noted Attachment H of the Governing Board agenda: a copy of his report of the meeting with realtors in the Woodbury area. Subsequent to the report, AIP Management has been in touch with the architect and the attorney regarding the type of rendering needed to serve two purposes: 1) upcoming meeting with the Taxpayers Association; and 2) satisfying the requirements of Oyster Bay, if we ask for a hearing. Two types of renderings are needed: 1) Aerial view, showing the periphery; and 2) Up-close depiction, from the ground. The architect is now preparing both. After receiving them, Management will arrange a meeting with the Taxpayers Association.

12. Discussion of Governing Board Agenda

  1. Composition of the Executive Committee
    Grant said he had submitted a report from the ad hoc Committee on the Composition of the Executive Committee. However, in putting together their recommendation he found he disagreed with them somewhat. He distributed an alternative proposal which he will move at the Governing Board meeting.

    In addition to changes recommended by the Wright committee, Grant proposes removing the requirement that Executive Committee members be elected every year and changing the term for Executive Committee members to three years.

    Havens said his only problem is that if a Governing Board term is three years, and an Executive Committee term is three years, it will be difficult to find people who are knowledgeable about AIP activities and have sufficient longevity to serve on the Executive Committee. He asked if Grant had considered a two-year term and making it no more than three terms.

    Grant said he does not feel strongly about two three year terms versus three two year terms. He feels if a person is not elected to a second term two year term because their term on the Governing Board has ended, a single two-year term may not be very productive.
    Frauenfelder said he is unhappy with Grant's proposal because Wright's proposal has more flexibility. This one puts in many constraints. He would be reluctant to bring this to a vote at this meeting, as society representatives need time to consider its effect.

  2. Other Governing Board Agenda Items
    Grant noted other topics to be discussed in the meeting: the Long-Range Plan, the Development Committee, and the proposed Advisory Committee on Physics Education.

    Frauenfelder said he has not named a Tate Award Committee as yet as he had not been able to reach the key person he wants to chair the committee.

    Ford said Strasberg wished to report on the meeting of the Committee on Society Services, which met the previous week.

13. Future Meetings
The dates for the September 1989 (Woods Hole) Executive Committee meeting have to be changed, as previously announced dates overlap with the Moscow Book Fair.

Dates now available are as follows: (**change of date; or * new)

1-2 Dec (5 p.m. Thurs - 4 p.m. Fri) Executive Committee, New York, NY
16-17 Feb (5 p.m. Thurs - 4 p.m. Fri) Executive Committee, Triangle Park, NC
** Note: the following set of meetings will be held at the Key Bridge Marriott Hotel, Arlington, VA:
30-31 Mar (1 p.m. Thurs - 12N Fri) Assembly of Society Officers
31 Mar (a.m. Fri) Executive Committee (if necessary)
31 Mar (12:45 - 1:15 p.m.) AIP Corporation Meeting
31 Mar -1 Apr {1:30 p.m. Fri - 1 p.m. Sat) Governing Board
5-6 Jun (5 p.m. Mon - 4 p.m. Tues) Executive Committee, New York, NY
7-9 Sep (9 a.m. Thurs - 12 N Sat) Executive Committee, Woods Hole, MA
**Note: the following dates are tentative, and are different than those announced during the October 1988 Governing Board meeting:
** 1 Oct (12N - 5 p.m. Sun) Executive Committee, Detroit, MI
** 1-2 Oct (6 p.m. Sun - 5 p.m. Mon) Governing Board, Detroit, MI
** 3-4 Oct (Tues, Wed) AIP Corporate Associates, GM Labs, Warren, MI

14. Other Business
There was no other business.

15. Executive Session
AIP staff were excused for the executive session at 3:45 p.m. This is reported in the official minutes only.

16. Adjournment
The meeting adjourned at 4:00 p.m.