Monday, September 15, 2014

The Phantom Reduction Part II

The Conjurer
"The Conjurer," painted by Hieronymus Bosch. The painting accurately displays a performer doing the cups and balls routine, which has been practiced since Egyptian times. The shell game does have some origins in this old trick. The real trick of this painting is the pickpocket who is working for the conjurer. The pickpocket is robbing the spectator who is bent over. Source

The Phantom Reduction Part II

"OK, so you're not raising tuition; why do the costs increase so much that we have to buy that freeze?"

State Senator Terri Bonoff in the September 12, 2014 Star Tribune report.

There are two principal reasons for the continuing escalation of costs at the University of Minnesota:

(1) The promise to reduce the cost of administration by $90 million over a six year period will not reduce the U of M budget by a single penny. President Kaler intends instead to simply spend the $90 million on "mission and mission support." See The Phantom Reduction.

(2) Reductions in some categories of expenses are more than offset by increases in other categories.

There was a net increase of $41.7 million in expenditures for mission support and facilities (from $956,896,120 in fiscal year 2012 to $998,643,697 in fiscal year 2013). There was a net increase of $7.9 million in expenditures for leadership (from $263,801,546 in fiscal year 2012 to $271,699,441 in fiscal year 2013).

The one expense that is most symbolic of the cost of administration is the compensation for leadership. The highly paid senior administrators, deans and directors collected an additional $2,250,198 in compensation for fiscal year 2013. (The total compensation for those leaders in fiscal year 2013 was $104,088,093.) See A Complete Accounting.

A former interim U of M president observed in November 2013 that "with real productivity gains, tuition could actually be reduced, assuming that state funding for the U holds where it is at currently." (emphasis added) See A Question of Productivity.
The Star Tribune has advocated a concentration on greater efficiency:
A freeze at the price Kaler and Rosenstone propose appears to resume a pre-2008 growth rate that had long exceeded the rate of inflation. It wouldn't appear to give the institutions much incentive for changes in higher education that might slow that growth rate or bring costs down. 
See the September 18, 2014 Star Tribune editorial
It will be necessary to stop and then reverse the escalating costs of higher education in order to reduce the staggering amount of student loan debt. The eventual solution will involve substantial reductions in the cost of administration and better allocation of state appropriations. See Whose Fault--Crushing Student Debt  and Devouring Our Children.

Michael W. McNabb

University of Minnesota B.A., 1971; J.D. 1974
University of Minnesota Alumni Association life member

No comments: