Friday, October 8, 2010

Trees Don't Grow to the Sky

The Current Financial Model at

The University of Minnesota

is Broken

There is a certain irony to the disclosure that one of the big drivers for cost at the U is student financial aid. This is the result of a shell game that has been played by the Morrill Hall Gang for the last ten years. The president has proclaimed that it is acceptable to have a high tuition model, because financial aid will pay for those who can't afford the high tuition. Unfortunately it is becoming more and more apparent that most people can't... First low income students needed a great deal of financial aid and now we are gradually having to work our way up through the middle class. This cannot go on.

The scene is reminiscent of the Sorcerer's apprentice - tuition is jacked up and most of the proceeds are used, indirectly, in a mad dash to increase financial aid. The rest of it is sucked into the notorious cost pools. Thus the tuition increase results in...practically no new revenue that is used for educational purposes.

The financial model at the U is broken. And further rounds of the same old shell game will not fix it.

"Dean Parente said that CLA's cost pools have increased by 7% from FY10 to FY11, and part of those increases are tied to the cost of the Minnesota Promise scholarships (undergraduate financial aid), which are charged to the cost pools. That is not a sustainable position."

"The University needs to think about whether it can afford the increases in financial aid... Normally matches come from outside funds to encourage more giving, Dean Davis-Blake observed, but for the University to raise $1 million and take $1 million out of its own pocket forever to match the funds raised is unusual. She concurred with Dean Parente: The growth in financial aid is not sustainable."

"Dean Finnegan said he agreed with the foregoing comments."

"Many deans believe that we cannot sustain this tuition buy-down by, in effect, eating our own seed corn. That is not sustainable, he said. He said he does not want to see even higher tuition increases, but using University funds to make up the loss of state investment means losing quality and falling into a slow downward spiral. Then who will want to attend the University? "

"Another point, Dean Finnegan said, is that the budget decision-making process is done backwards. The University starts with the cost pools, not the revenue-generating units. Professor Martin said that everyone knows there will be a new president soon. In the search process, it would make sense for anyone meeting with candidates to talk with them about the need to reverse the order of the process."
Source: Senate Committee on Finance and Planning
Tuesday, September 21, 2010

"The fault, dear Brutus, is not in our stars,
But in ourselves, that we are underlings." 


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