State (and) University Part II

State legislators have demanded an accounting of the administrative costs at the University.  President Kaler has announced that an outside consulting firm will be hired to prepare an analysis.

Fees of consulting firms are one of the costs of administration.  In fiscal year 2012 the administration paid an astounding $34,815,696 for administrative consulting and professional services.  See p. 17 at line 17(d) of the Report on Cost Definition & Benchmarking.   Now the administration will pay a consulting firm to tell us, in part, whether it pays too much to consultants.

Whether a consulting firm outside the University will produce an independent analysis remains to be seen.  In October 2010 the administration retained a firm to prepare an economic impact study (to calculate the contribution of the University to the economy of the state).  Before the study was conducted the U of M vice president for research declared:  "We will structure the research to provide information that will serve to support government relations, advancement, and development."   See p. 2 (final paragraph) of the Overview of Economic Impact Study (emphasis added).  So the administration received the analysis it ordered.

In 2008 and 2009 the consulting firm Bain & Co. (yes, that Bain) examined the cost of administration at UC Berkeley, Cornell University, and the University of North Carolina.  A reporter at Inside Higher Education boiled down the conclusion:

In other words, universities are complex, decentralized institutions.  They waste a lot of money on redundant administrative activities and could probably save money in the long run if they made big changes to their structures.

Kiley, Where Universities Can Be Cut (emphasis added).  See also the November 2012 Bloomberg news report on Bureaucrats Paid $250,000 Feed Outcry Over College Costs at and The Cost of "Top Talent."

So it will not be a saving grace if the U of M study shows that its costs of administration are comparable to other large universities.  Until recently no one has been watching the store anywhere:

At research universities--both public and private--efficiency has been considered an afterthought . . . . Before the [financial] crisis there was little incentive for institutions to work to lower the cost of producing a graduate.  U.S. News & World Report does not give points [in its rankings] for producing a degree at low cost.  In fact, the methodology actually weighs higher expenditures per student as a positive.

Kiley, (referring to the remarks of Ronald Ehrenberg, director of the Cornell University Higher Education Research Institute)(emphasis added).

Here at the U of M there was public outrage in early 2012 when the news broke that President Bruininks handed out millions of dollars in "transitional" compensation and golden parachutes to departing senior administrators.  The response of the administration included the release of the October 2012 Report on Cost Definition.  President Kaler declares that the amount spent on "administrative oversight" is limited to 11% ($208,545,279) of the total compensation paid to all University employees ($1.9 billion).  See p. 17 at line 13 (f), (g) and (h) of the Report.  But "administrative oversight" is only part of the total cost of administration disclosed in the Report.  See On The Cost of Administration Part III.

Beyond the question of how much the administration spends on itself there is the question of how it is otherwise using the financial resources entrusted to the University by the legislature and by individual and corporate donors.  In December 2011 Chris Cramer, chair of the Faculty Consultative Committee, observed:

The broader problem is that the vision should be that this is a university where the best courses are taught, but it is moving to teaching courses that instead make the most money.

See section 1 of The Rest of the Story (emphasis added).

In a January 11, 2013 Star Tribune letter Leslie Everett, the coordinator of the Water Resources Center at the U of M, noted:

Part of the administrative problem at the University of Minnesota has been poorly analyzed and off-mission grasps at cash. . . .  The sacrifice of an essential research and teaching site at Rosemount for gravel mining was cited in recent Wall Street Journal and Star Tribune articles.  

[President] Kaler could bring an end to these disastrous forays by publicly recognizing that not even the university can turn gravel into gold nor transform exurban development into a model of sustainability. 

The academic home of Norman Borlaug should recognize that its value is in research and education to improve food supply, energy, the environment and health, and that attempting to trade away any of these missions for short-term cash will diminish the university.  

See The MoreU Park Fiasco (emphasis added).  See also section 3 of The Rest of the Story.

The voices of such well-qualified professors are seldom heard by those in authority.  The Regents are part-time volunteers.  They rely on the senior administrators to sift through the enormous volumes of information about the University, so they see only the information selected by the administrators.  See section 2 of Going To Market Part II. 

Nor do the Regents have much time to listen to other members of the University community with different perspectives.  The Regents develop a bond with the senior administrators with whom they spend most of their time and thus have a tendency to dismiss other viewpoints.

State legislators have even less opportunity to learn about the operations of the University from the people in the trenches--professors, staff, and students.  The legislature needs a qualified person who can devote full-time attention to the University in order to provide reports on its operations to the higher education committees.  This legislative liaison should have the responsibility to review the information produced by senior administrators, to collect additional information through his or her own independent research, and to meet with all groups at the University so that perspectives of other well-informed and thoughtful members of the University community are presented to the legislature.   

Michael W. McNabb

University of Minnesota B.A. 1971; J.D. 1974

University of Minnesota Alumni Association life member