… in the Minneapolis Star Tribune notes that the most charitable description of what’s been going on at the clubby University of Minnesota medical school would be “bizarre.”
Wednesday, April 10, 2013
In a guest column in the April 10 Star Tribune the chair of the Board of Regents responds to the criticism of excessive costs of administration at the U of M by Governor Carlson in his April 7 Star Tribune guest column.
Here is "the rest of the story" to the response of the Regents.
(1) "The university has realized millions of dollars of savings . . . . "
In January 2013 the U of M chief financial officer told state legislators that the administration has cut $228 million since 2006. See the January 31 Star Tribune report. From fiscal year 2007 through fiscal year 2012 the total operating expenses for the University were just under $17 billion. See the U of M financial reports. So the cuts amount to 1.3% of the total operating expenses. Does the administration view this as making tough choices? Or making a serious effort to control costs and tuition?
(2) "As part of our legislative request this year we have pledged to freeze Minnesota resident undergraduate tuition for two years . . . ."
The administration proposes to freeze tuition on the condition that the legislature increases state appropriations by $91.6 million for the next two years. See the September 14, 2012 Pioneer Press report.
The freeze would be limited to undergraduate tuition only (and to Minnesota residents only). The tuition for students (both resident and non-resident) in graduate and professional programs is what really compounds the crushing debt on young persons. See Whose Fault--Crushing Student Debt.
(3) "The Twin Cities campus has a lower net price (tuition, fees, room and board minus financial aid) than any other four year college in the state--public or private."
Net price does not provide any relief to the students because the administration classifies student loans as "financial aid." The Minnesota Daily describes this argument of the administration as cynical and deceptive. See Driven To Deception.
(4) "The board and the Kaler administration undertook an aggressive internal review to study . . . its administrative costs."
The Regents fail to mention that the internal study showed that the total cost of administration for fiscal year 2012 exceeded $852 million (or 28% of the total expenditures of the University). See On The Cost of Administration Part III, So their proposed $28 million reduction in administrative costs over the next two years does not make much of a dent in administrative overhead.
(5) "The column suggests that the university can operate outside the marketplace for faculty and staff salaries. . . ."
Governor Carlson limited his criticism to the compensation of administrators. He noted that universities "compare their rising costs with those of other spiraling systems and proclaim this to be the market."
The Regents should know that the law restricts the pursuit of personal wealth by the leaders of tax exempt organizations. See the Postscript to $tate of the University--A Parent's Perspective.
Society grants tax exemptions to non-profit institutions of higher education in order to promote the common good and not to enrich administrators. If the motivation of the administrators is to accumulate personal wealth, then they should seek those riches in for-profit organizations. See The Cost of "Top Talent" and The Cost of "Top Talent" Part III.
(6) "This argument ignores a reality that was unmentioned: a $140 million reduction in annual state support to the university since 2008."
Over the past decade the U of M administration has increased spending by $1 billion--despite a reduction in state appropriations. In fiscal year 2002 the total operating expenses for the University were $2,005,138,000. In fiscal year 2012 the total operating expenses were $2,948,366,000.
The fuel for this billion dollar explosion was skyrocketing tuition. In fiscal year 2002 the administration collected a net amount (after scholarships and grants) of $293,127,000 in tuition and fees. In fiscal year 2012 the net amount of tuition and fees collected was $696,278,000.
The senior administrators and the Regents have shown no mercy to the students (and their parents). This skyrocketing tuition far exceeded the reduction in state appropriations. In fiscal year 2002 the University received $643,088,000 in state appropriations. In fiscal year 2012 the amount was $572,075,000.
See pp. 17-18 of the 2002 U of M annual financial report and pp. 14-15 of the 2012 U of M annual financial report.
If the Regents are unwilling or unable to make substantial reductions in the cost of administration, then the legislature will do so for them.
Michael W. McNabb
University of Minnesota B.A. 1971; J.D.1974
University of Minnesota Alumni Association life member
at 7:31 PM