The Natives Are Restless, or

Does BigU Have the Money to Fulfill Our Ambitious Aspirations?

Minutes*

University of Minnesota Senate Committee on Finance and Planning

Tuesday, September 18, 2007

* These minutes reflect discussion and debate at a meeting of a committee of the University of Minnesota Senate; none of the comments, conclusions, or actions reported in these minutes represents the views of, nor are they binding on, the Senate, the Administration, or the Board of Regents.

Tuition Increases on the Horizon

Will the Regents support a 7.5% tuition increase, Professor Martin asked? They have been told it is part of the budget plans, Mr. Pfutzenreuter said. Professor Chapman suggested that 7.5% will be seen as quite high. Mr. Pfutzenreuter agreed but pointed out that for Minnesota residents the legislature provided funding to buy down the increase by 2%, so it will only be 5.5% (for students from households with an income of up to $150,000). Professor Chapman said he was sorry to see such an increase in an election year; Mr. Pfutzenreuter said the other choices are increased state funding or less new investment.

Austerity at BigU

Professor Chapman inquired of Mr. Pfutzenreuter if, based on his experience, this will be perceived as an austerity budget. Between the tuition increases and the cuts, it looks pretty austere to him, he said. Mr. Pfutzenreuter said it is austere.

Professor Martin said there is no sense of this coming austerity in the University community after all the discussion about how much support the legislature provided for the biennium. This will be a big surprise, she said.

Professor Martin reminded Professor Konstan that while the University can get rid of a college, it cannot get rid of the faculty, who hold tenure in the University. It seems, however, that the University has closed units and not saved money, Professor Konstan said.

Later, Professor Konstan asked whether the universities it seek to join--top public institutions like Michigan and Berkeley--share Minnesota's model of continuously squeezing units. Does this squeeze really lead people to think efficiently, or does it just add stress that saps productivity?

Mr. Pfutzenreuter said he had proposed the approach of putting the burden on the cost-pool owners. Last year they were told to talk to their customers; this year they have an obligation to reduce costs or find more productive ways to do business—and not, for example, by closing four libraries. At some point almost all at the University will say there is nothing more that can be done more efficiently, Professor Martin commented, and people may be close to that point now—and cannot respond in a rational way to directives for greater efficiency.

Professor Konstan related that his back-of-the-envelope calculation was that his department spent $20,000 in faculty time debating whether to hire a faculty member into an open slot versus saving that slot to offset an uncertain upcoming cut. Multiplied across the University, that's a lot of research, teaching, and service not being done that could lead towards top-three status. "We may be spending more time and energy to find cuts than the resulting savings yield in gains.”

More generally, Professor Konstan asked, is $8.5 million in reallocation providing more advancement of the University towards the top-three goal than the amount that University-wide agonizing, stress, and wasted effort over these cuts moves it away from the goal? Mr. Pfutzenreuter agreed that the University may be trying to invest too much in new programs or activities

UMorePark – Gold Mine or Money Sink?

He has been asked a number of times how to pay for this, Dr. Muscoplat related; the goal is to make a lot of money for the University that would be captured in an endowment to support University's academic mission, but it must spend some money to make money. There is several million dollars set aside for UMore Park; there are options for funding, including the mineral rights for the gravel and hiring a developer to sell land, for example. He said he believes the University can finance the project, but at this point they have only a vision, not a plan.

Dr. Muscoplat said he has talked with Dean Bailey about whether the University could develop a different educational system at UMore Park. The question is how to get there; it will not happen at the academic level without resources, such as research assistants and faculty lines. Any plan can be futuristic and scholarly, Dr. Muscoplat said, but if it does not make money for the University, it will not be built.

There is a lot of benefit to the University to invest in real estate as a growth vehicle; the Harvards of the country are doing it. That is a political decision that the Board of Regents must decide, Professor Martin said, but the University does not have a good record as a landlord.

Discussion

With respect to the top-three goal, if the University does not have the financial foundation to make it work, it is unwise to pursue the goal. Only the Academic Health Center has said what it needs to get into the top three, which is 500 additional faculty and new space for them. CLA could say that it needs 200 additional faculty but it has no place to put them. Ambitions may be outranking the ability of the University to achieve them.

Professor Konstan said it would help to identify what the top-five institutions do, whether they have continuing stress. If they have financial stability, the University is in a losing game.

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