Thursday, January 10, 2013

University of Minnesota's Administrative 
 Expenses Become Target of Lawmakers

From the Pioneer-Press:

Some state legislators vow to comb through the University of Minnesota's budget. Others demand a comparison between what the U and peer institutions spend on administration.

A front-page Wall Street Journal story on the university's rising administrative tab last week ran at a delicate time. The unflattering national press stirred up perennial questions about the university's overhead just as legislators gear up to tackle its $1.1 billion biennial budget request.

University President Eric Kaler went on the offensive: He penned an editorial. He sent lengthy email rebuttals to employees, alumni and parents. He stopped by the Capitol. There, even some Republican legislators say he's proved he is serious about a promise to rein in operational expenses he made when he took over 18 months ago.

Key legislators might differ on how lean the U is, but they agree about this much: Over the years, the U has suggested that sizing up and comparing administrative costs -- both to previous years and to other universities -- is just too messy a task. That stance no longer resonates after years of legislative clamoring for solid numbers.

Kaler said the U bowed out of an initiative to compare such costs across other Big Ten schools a few years back. Now, he is revisiting that decision.

"Going forward, the focus here is on being as effective and efficient as we can be," he said.


Kaler has walked a fine line on the issue of administrative costs: He
promised to slash them and shrink bureaucracy in his inaugural address. A few months into his tenure, he said the U's administration already was relatively lean. In recent months, he has made cuts.

He eliminated the Office for Academic Administration, including a vice president position most recently worth $414,000 in pay and benefits. He also did away with the Bursar's Office, where seven employees handled primarily student payment processing made obsolete by electronic banking. The total savings: $2.2 million.
Kaler also touts recent energy, purchasing and information technology savings worth millions of dollars. He feels the Journal story on U spending buried such steps as it zeroed in on payroll growth.

Based on 2011-12 data the U submitted to the federal government, its Twin Cities campus employs more than 17,000 people, or roughly one for every three students.

A 2011 university internal report showed a 10-year 52 percent increase in the number of jobs labeled administrative as total employment grew about 11 percent.

But school officials say the U's payroll data -- and thus analyses based on it -- misclassified about 350 instructors, lumping them with 650 administrative positions added in the past decade.

In any case, U leaders say the payroll has grown for legitimate reasons. Student enrollment is up 15 percent since 2000. Beefed-up support services such as academic and career counseling have helped push up graduation and retention rates. And a spike in research grants meant more staff to oversee compliance with often cumbersome regulatory strings attached.

Ann Hagen, chair of an advisory committee of the U's Academic Professionals and Administrators group, said spending criticism tends to paint administrators with too broad a brush: The 5,500 members of her employee group counsel, teach and coach students, facilitate research and staff extension offices. In 2011, according to the group's website, it represented almost 30 percent of university employees, up from 6 percent in 1980.

"We're not paper-pushers who sit around soaking up money," Hagen said, adding members worry about their jobs.

To Kaler, it's patently unfair to blame the university's rising tuition squarely on administrative costs when state support has declined steadily.

His assessment today: Some areas of university operations, such as the finance office, are extremely lean. Others need to get leaner.

And, he readily acknowledges, the university should do better at keeping track: "I think it's a fair question you should ask of any organization: 'How much do you spend on administrative oversight?"

In October, Kaler's administration unveiled a new breakdown of payroll spending in three broad categories. Professors and researchers accounted for about 57 percent of total payroll costs. Administrators in oversight roles covered another 11 percent. The remainder went to salaries and benefits for support positions, from clerks to librarians to administrators without supervisory duties in human resources and finance.

Board of Regents Chair Linda Cohen said Kaler has made progress.

"I think there are many things we're doing right," she said, "and many things we can approve upon."   [improve?]


The Wall Street Journal story generated buzz on the Capitol in the first week of the legislative session. Within days, several House members had forwarded it to Rep. Bud Nornes, R-Fergus Falls, the ranking member on the Higher Education Finance and Policy committee. Terri Bonoff, the new DFL chair of the Senate Higher Education and Workforce Development committee, summoned Kaler to her office on Monday.

Legislators give Kaler credit for the steps he has taken to boost efficiency. They caution against letting the debate over operational spending overshadow the achievements of its students, faculty and researchers.

To Nornes, the charge that the U is top-heavy is at least partly a perception issue. Jeremy Miller, R-Winona, the ranking minority member on the committee Bonoff chairs, doesn't see it that way.

But lawmakers tend to agree: They have lost patience with the idea that administrative costs are so complex an issue that they defy definition or historical comparison.

Miller says he requested an estimate for such costs during the 2011 session. A year later, he got a breakdown of compensation for 11 top administrators and a 2010 comparison of presidential pay at Big Ten universities. For him, that response did not cut it.

He said this year he plans to ask for much more detailed spending information from the U as well as the Minnesota State Colleges and Universities system.
"I think we really need to dig deep into their current budgets before we look at their new requests," he said. "I don't want to micromanage the university, but I do think it needs to be held accountable."

Senate Majority Leader Tom Bakk, DFL-Cook, said earlier this week he was "very troubled" by the Wall Street Journal story. He and Bonoff, of Minnetonka, sent Kaler a letter requesting an administrative cost comparison with other Big Ten universities, with an interim report due in March.

The university's budget proposal calls for a $91.6 million increase over the biennium. It ties some of the extra money to a two-year undergraduate tuition freeze. Heeding a call from Governor Mark Dayton, the U also pledged to trim 5 percent of operational costs, or $28 million over two years, and channel the savings into the classroom and lab.

That amount will include the cuts made earlier this fiscal year and others that are in the works, such as the closing of several academic centers, Kaler said: "It will be a number of small things adding up over time."

To Cohen, the board chair, the scrutiny is not all bad, pushing the university toward more transparency. When it comes to sizing up administrative costs, she said, "It's very tough to compare, but we're going to give it a try."

Megan Boldt and MaryJo Webster contributed to this report. Mila Koumpilova can be reached at 651-228-2171. Follow her at

No comments: