Eric Kaler: Criticism of U's fiscal care shortsighted

The President of the University of Minnesota replies to criticism, from the Star-Tribune:

 Recent media analysis of school's management was incomplete.

  

Counterpoint

Charles Lane's "Let's shove back at higher ed" (Jan. 3), about costs at public universities, summarized parts of a recent Wall Street Journal article about the University of Minnesota. The articles did not report that despite stunning state disinvestment, the university is more productive than at any time in recent history. The U serves nearly 9,000 more students today than it did in 2000, an increase of nearly 16 percent, and has reduced the per capita cost of educating students by 13 percent.

We have increased research grants and contracts by 40 percent. Private philanthropy, which directly benefits students, has grown to record levels. Students at the Twin Cities campus are graduating at rates nearly 43 percent higher than they did 16 years ago, and the rate at which the U retained first-year students into a second year on campus reached an all-time high of 91 percent in 2011.

Lane also took at face value the Journal's analysis of administrative hiring at the university without providing the proper context. Growth of research (and attending to the myriad regulations associated with it), improving the student experience and managing complex technology all require staff who are classified as "administrative." And many of those activities do benefit students directly. Our analysis shows that 9 percent of our budget is spent on administrative oversight, a level in line with many nonprofit organizations.

Finally, Lane criticizes a "vast new housing development" without mentioning that this 5,000-acre parcel owned by the university will be mined for gravel for decades and redeveloped, yielding millions dollars of revenue over time for the university.

I agree that reducing costs -- including the cost of tuition -- on U.S. campuses must be a priority as the historic shift away from state support of public higher education continues. In addition, enormous change is underway in all institutions, driven by technology, shifting politics and a different economy.

Solving these problems isn't easy or fast, particularly at large, decentralized research universities. Institutions must standardize operations to a much greater degree and apply lessons learned from business. Higher education also must be more accountable to policymakers, business partners and, most importantly, students and their families.

Since I became president 18 months ago, reducing our administrative costs has been a top priority, and we've taken action. In my inaugural speech, I pledged to hold the line on administrative expenses, and we've made significant progress.

We have eliminated two major administrative offices, saving more than $2.2 million annually. We have saved $5.6 million in energy costs during the past three years. We were the first public higher-education institution nationwide to move faculty, staff and students to Google applications -- increasing efficiency and avoiding $15 million a year in technology costs.

Finally, we kept tuition increases at a 12-year low of 3.5 percent last year and have made freezing undergraduate tuition at current rates for the next two years our highest priority.

Simultaneously, we have allocated $20 million for hiring additional faculty.

We know there is much more work to do. Tough choices lie ahead for all colleges and universities, public and private, but the conversation about tuition should be framed by facts in perspective -- in Minnesota's case, in the context of the loss of nearly $140 million in state aid since 2008.

I'm certain that Mr. Lane -- a Yale Law School and Harvard College graduate with impressive professional credentials -- understands the value that is at stake.

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Eric W. Kaler is president of the University of Minnesota.

  
There are several comments on the Strib web-site. I'd encourage those with an interest in making the U a great land grant university to read them.

Mr. Michael McNabb, a frequent contributor to this blog,  commented:

In fiscal year 2012 the total cost of administration included $208,545,279 for administrative oversight compensation, $441,912,901 for administrative staff compensation, $131,590,95 for administrative supplies and services, $35,175,423 for equipment for administration, and an astounding $34,815,696 for consulting and professional services.

So the total cost of administration consumed 28% of the $3 billion in total expenditures for the year. Even with a reduction in state appropriations, the U of M administration increased spending from $2 billion in fiscal year 2002 to $3 billion in fiscal year 2012.

The fuel for this billion dollar explosion was skyrocketing tuition that soared from $293 million in fiscal year 2002 to $634 million in fiscal year 2011.

For more details see On The Cost of Administration Part III on The Periodic Table blog.