Phantom Reduction

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

It is now clear that President Kaler's promise to reduce the cost of administration by $90 million (over six years) will not produce any reduction in the U of M budget. The president intends instead to simply spend the $90 million on "mission and mission support." See his remarks to the faculty at p. 8 of the September 26, 2013 FCC report.

So instead of making a decision to even slightly trim the $3 billion U of M annual budget the administration will quite literally continue to pass the buck to beleagued students (and their parents) and to the citizens of our state.

Moreover, there is no easy way to monitor whether the administration will even fulfill its promise to reduce spending on itself. (And over six long years who will even remember the promise?) The administration should be required to provide the base line of the current cost of administration and to then provide annual reports to verify the specific expenditures that have been reduced. 

There were variations in the level of state appropriations in the 2002--2012 time period. When state appropriations declined, the administration increased tuition (by far more than the reduction in appropriations). When state appropriations increased, the administration still increased tuition. The total cost of operations at the U of M soared from $2 billion per year to $3 billion per year as tuition skyrocketed. See Whose Fault--Crushing Student Debt. The administration accepted the current two year tuition freeze (limited to undergraduate tuition for Minnesota residents) only on the condition that the state increase appropriations. 

The total cost of administration now consumes $850 million per year or 28% of the cost of operations. See On The Cost of Administration Part III. This demonstrates a long term failure on the part of the administration to exercise any restraint on spending on itself. 

This also demonstrates a long term failure on the part of the Regents to exercise any effective oversight. The Regents are part-time volunteers who rely on the administration to provide information for their decisions. The chair of the House higher education committee recently referred to the Regents as "the House of Lords--they have nice titles, a nice place to meet and don't do anything." See the April 15, 2013 MinnPost report.

Like real estate developers, such as the current owner of the Minnesota Vikings, the U of M leaders spend other people's money (OPM in real estate terminology). See Other People's Money. The highly paid senior administrators and the Regents are so far removed from the economic lives of students and their parents and the public at large that they are seemingly oblivious to the financial hardship that results from their decisions to spend other people's money. 

In the absence of any self-restraint on spending by the U of M administration it may be necessary for the state legislature to begin marking most of the state appropriations as special appropriations in which it designates the specific uses for the funds. 

Each biennium the citizens of our state now invest more than $1 billion in the U of M in general appropriations. With that much at stake the legislature should appoint a qualified person to monitor on a continuing basis the operations of the University and its use of state appropriations. This legislative liaison (or watchdog) 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 the perpectives 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

The UMore Park Fiasco

"It's hard to make predictions, 

especially about the future."

This blog has been very critical of the UMore Park fiasco, and for a long time.

Some reminders:

The MoreU Park Fiasco 

For the Record: More on MoreUPark  

On the Continuing MoreU Park Fiasco Is the University of Minnesota a Land Grant Institution

MoreU Park The Public be Damned? 

An Ag Researcher at the University of Minnesota Questions Priorities for MoreU Park 

More on MoreU... 

More on MoreU Sunshine is the best disinfectant.. 

Exactly how long is the UMore Park craziness going to continue?

From today's Minnesota Daily:

UMore Park draws concern

Plans for the University of Minnesota’s UMore Park are in full swing, but some University officials aren’t convinced it’ll generate revenue in the future.

The Rosemount City Council approved the Alternative Urban Area-wide Review on Oct. 15, which allows UMore Park to move forward and hire a master developer. But the University’s Board of Regents is divided on whether the project is right for the University.

Development plans for UMore Park include a self-sustaining community for 20,000 to 30,000 people, a sand and gravel mine, and industrial areas. Regents approved the initial plans in 2008.

Although a concrete timeline hasn’t been set, the board next has to approve the area’s developer once one is chosen from a nationwide search.

The University has owned the 5,000 acres of land, located 25 miles southeast of the Twin Cities metro area, for more than six decades. In that time, faculty, staff and students have used the land for research.

The University plans to implement the development over the next 25 to 30 years. In a 2005 report on the project, an executive committee to then-University President Bob Bruininks insisted the money gained from the land would help the University become one of the top three public research institutions in the world by 2015.

But during an update on UMore at this month’s regents meeting, some voiced concerns about the project’s progression.

Regent Laura Brod said the decision to develop the land predated her time on the board, and that she wasn’t sure if the University should be in the business of development.

“I worry a little bit about being in development and about competing with the private sector,” she said at the meeting.

Brod said the board and the University need to examine how they will spend their money and time when considering future projects.

Regent John Frobenius, who was on the board when it approved the preliminary plans, said real estate was booming in the early 2000s when the project started, but it has since slowed. 

“There were some pretty ambitious development plans that probably were more extravagant than they should have been,” he said. “It probably doesn’t produce as much resources as some of us might have thought it could initially, but that’s what you learn as you get into a project.”

Other regents questioned whether the project has made any money for the University at this point.

University Chief Financial Officer Richard Pfutzenreuter said the project hasn’t paid for itself yet, but mining sections of the land is generating revenue.

In 2011, the University signed a 40-year agreement for a sand and gravel mine on the site. Officials estimated the University would make $3 to $5 million per year off the mine, according to a previous Minnesota Daily article.

From when the project began until the end of June 2014, Pfutzenreuter said, its estimated cost to the University will be $10.2 million, and it will have made a total of nearly $8.3 million.

But Pfutzenreuter assured the board that the land has increased in value over time.

The regents created a legacy fund for the project in 2008, which assures that all revenue earned from UMore Park will go toward academic research, education and public engagement.

“All of these efforts … between the mining and the development will make this venture a positive cash flow and allow funds to flow into the legacy fund as the board adopted that plan,” Pfutzenreuter said at the meeting. “But so far, we’re just a tad short.”

Carla Carlson, executive director of UMore Development LLC, said the University is using the land to its “best and highest use.”

“We are generating income,” she said.

Carlson said in a July Minnesota Daily article that she estimated the annual budget for upkeep and planning of the development to be about
$1 million.

Regent David Larson said he was concerned with the cost of maintaining the land and asked whether the University could sell the land in the future if necessary.

“We should always be looking at the alternatives,” he said at the meeting. “In other words, is it much more valuable for someone else’s use at some point in time?”

University President Eric Kaler said for now, the University will continue to use part of the land for agricultural research.

“I think it’s a valuable resource for the University and we should use it to its highest and best use,” he said.

Carlson said she couldn’t comment on Larson’s concerns.

When asked how much money the project could potentially make for the University, Carlson said it’s too soon to estimate.

“It’s hard to predict what will happen 30 years in advance,” she said.

When Professor von Dassow Speaks,

Hopefully Somebody Will Listen...

From Pharmalot:

Academics Want University To Probe 

A Suicide In Seroquel Trial

What contributed to the 2004 death of Dan Markinson? This nagging question has been asked ever since the troubled 26-year old committed suicide while participating in a clinical trial that was run by University of Minnesota researchers. The ensuing years have produced a lawsuit by his mother and probes that went nowhere amid charges of conflicts of interest and mismanagement at the school.

Now, a group of 171 academics have sent a letter asking the Faculty Senate, which is the governing body, to run a public investigation. Their hope is to pressure on the university - which has repeatedly dodged blame despite hounding from some of its faculty – while also shedding light on clinical trial enrollment practices and improving the integrity of medical research at medical schools.

“We felt that we had to do something,” says Trudo Lemmens, an associate professor and Scholl chair in Health Law and Policy at the University of Toronto. “Our hope is that this will show this is joint concern shared by many people in the academic community who specialize in these issues and that it’s noted outside of the school. We hope we’ve sent a message that this is very serious and deserves attention.”

The letter was signed by dozens of academics who specialize in bioethics, law, health sciences, public policy and medicine at universities in several countries, including the US, the UK and Canada. Among them are former editors of the British Medical Journal, The New England Journal of Medicine and PLoS Medicine, as well as a co-founder of The Hasting Centers, a prominent bioethics think tank (here is the letter and the list of signatories).

We asked the university president Eric Kaler, who also chairs the Faculty Senate, for a response, but did not receive a reply. However, Eva von Dassow, an associate professor of classical Near Eastern Studies, who is also vice chair, sent us this note:

“I cannot speak for the university, nor can I even speak for the faculty prior to having an opportunity to put this issue on the table for discussion in faculty governance. What I can tell you now is that I shall request that it be brought before the Faculty Consultative Committee, of which I am a member.  I shall also seek to put the case to President Kaler, urging that the university respond positively to the letter.”

Those of us at the University of Minnesota who know Professor von Dassow have enormous respect for her.  Here is why:

This video has been watched by 24,877 people as of today. 

Getting by with a little help from your friends...

With a little help from my friends...

Conflict of interest upon conflict of interest? The time is long past since the University of Minnesota should do something about this festering sore.

My friend Carl Elliot writes on the latest Conflict of Interest finding concerning this appalling situation. 

NOT UMN proud!

Carl Elliott, 10/18/2013

If the mutilated body of one of your research subjects is discovered in a blood-soaked bathroom, who should investigate the death? If you want to be cleared of blame, it’s useful if the investigation is led by a colleague from your own department. If you were being paid by a drug company to recruit that subject into a research study, it’s best if your colleague is getting a paycheck from the same company. Best-case scenario: your colleague is on the university’s “conflict of interest” committee, too, just in case anyone raises questions.

Let me back up and explain. In 2004, a young man named Dan Markingson committed a violent suicide in an AstraZeneca-sponsored study of antipsychotic drugs – the so-called CAFÉ study -- at the University of Minnesota. The CAFÉ study was plagued by ethical problems, ranging from coercion and corruption to incompetent medical care. For years, stunned critics have challenged the University of Minnesota officials to justify the troubling study and the actions of its researchers, but those officials have simply refused to debate the issue, claiming that the University of Minnesota has already been exonerated.

A central piece of the exoneration claim has come from the (then) general counsel for the university, Mark Rotenberg. In 2010 Rotenberg issued a statement saying that the university’s institutional review board (IRB) had reviewed Markingson’s suicide, and that not only had the IRB found no fault with any university faculty members, it had also found no causal link between the CAFÉ study and Markingson’s suicide. Rotenberg repeated this claim in November 2012, when the Minnesota Board of Social Work issued a number of damning findings regarding Jean Kenney, the study coordinator for the CAFÉ study. Yet during this time Rotenberg never produced an IRB review. In fact, no one at the university ever provided any evidence that the IRB conducted more than a routine, administrative “continuing review” of the CAFÉ study, much less any evidence that the IRB exonerated the researchers from blame for Markingson’s death.

For some years I have doubted the claim that the IRB looked seriously into Markingson’s suicide. The main reason for doubting that claim is a 2007 deposition by Richard Bianco, the head of research protection at the university at the time of Markingson’s death. In that deposition, Bianco testified that neither the IRB nor anyone else at the university had ever investigated the death. His testimony is unambiguous. In response to the question, “Has the university done any investigation into the death of Dan Markingson?” Bianco replied, “No.” When Bianco was asked, “To the best of your knowledge, did anyone at the IRB, at the University of Minnesota, or anyone under your office investigate this case, actually look at the records and see the court documents that I’m describing, and if so, could you give me the name of that person?” He replied, “Not to my knowledge.”

For months now, I have been filing Data Practices Act requests to the university. First I asked for any review the IRB conducted. Later, when the university admitted that there was “no written IRB report” on Markingson’s death, I asked for the minutes of the meetings in which Markingson’s death was discussed. Last Friday, six weeks after my latest request, the university finally gave me the redacted minutes of those IRB meetings. It is now clear why the university has not been eager to make those minutes public. The conflicts of interest on the IRB are astonishing.

The IRB panel that reviewed the serious adverse event report of Markingson’s death was chaired by psychiatrist David Adson. As a faculty member in the Department of Psychiatry, Adson was a colleague of Stephen Olson, the principal investigator of the CAFÉ study. He reported to Charles Schulz, the Chair of the Department of Psychiatry and a co-investigator on the CAFÉ study. Adson was also the director of the Ambulatory Research Center, which housed the CAFÉ study. According to his CV, Adson chaired the IRB Panel from 1998 through 2005, which suggests that not only did he chair the panel when it received the report of Markingson’s death, but he was also chair when the IRB approved the CAFÉ study in 2002. And while it is possible, of course, that Adson recused himself from the IRB meetings in which the CAFÉ study was discussed, there is no suggestion of a recusal in the minutes.

If these personal conflicts of interest are not enough, consider the financial conflicts. According to a public database maintained by the Minnesota Board of Pharmacy, Adson has received more than $650,000 in consulting, research, and speaking fees from the pharmaceutical industry from 2002 to 2010. In 2004, the year when the IRB received word of Markingson’s suicide, Adson reportedly received $5,200 as “compensation for services” to AstraZeneca, the sponsor of the CAFÉ study. The next year, when he was still IRB chair, he received $16,884 from AstraZeneca. In total, AstraZeneca paid Adson over $149,000. Adson also received payments from Merck, Forest, Bristol Myers-Squibb, Pfizer, Wyeth, Sanofi-Aventis, and GlaxoSmithKline.

How could a person with such significant financial ties to the pharmaceutical industry be allowed to chair an IRB panel? Wouldn’t the university’s Conflict Review and Management Committee consider this a serious conflict of interest? For an answer to that question, you might well ask Adson himself. According to his CV, he was a member of the Academic Health Center Conflict Review and Management committee from 1998 until 2008.

No one should be surprised by this -- and not simply because the University of Minnesota has papered over controversial conflicts of interest for years. This claim of IRB review of the Markingson case is just one of many supposed “exonerations” of the university that have fallen apart under scrutiny – such as the claim of exoneration by a county court, and by the Minnesota Attorney General, and by the Board of Medical Practice. In fact, this is not even the first time that Adson’s financial ties to the pharmaceutical industry have been questioned. As the St. Paul Pioneer Press reported in 2007, Adson served as the clinical leader of a controversial Eli Lilly-funded state program aimed at influencing the prescribing choices of Minnesota psychiatrists. Critics charged that Lilly’s antipsychotic, Zyprexa, benefited from the program at the expense of its competitors. Two years later, Lilly paid $1.42 billion to settle civil and criminal fraud charges for illegally marketing that drug.

Will this latest finding make any difference? Probably not. Here at the University of Minnesota, no one will respond to complaints like these. In the past I’ve tried everyone from the Research Integrity Office and the Research Consultation Service to the president of the university. Any complaint about the Markingson case is turned over to the Office of the General Counsel, which responds with a boilerplate denial of responsibility. This, of course, is a recipe for research abuse.

Carl Elliott, a Hastings Center Fellow, is a professor at the Center for Bioethics at the University of Minnesota. His most recent book is White Coat, Black Hat: Adventures on the Dark Side of Medicine.

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Question: Who is Oliver and who is the chef?

Lori Sturdevant writes in the Star-Tribune today:

Can government work anywhere? Sure — in Minnesota
Action on higher education in Minnesota shows hope, even if it’s in lacking elsewhere.

They got an earful about higher education’s Big Hurt — high student debt loads. The latest stats, from 2011, peg average student loan debt in Minnesota at $29,793, third-highest among the states. That’s the legacy of state disinvestment in higher ed and the tuition increases that followed between 2002 and 2012.

“Words cannot describe the depths of despair that too many Minnesota kids are feeling right now,” Bonoff said. “We had young people cry at the microphone. They couldn’t help themselves. This is a travesty that we are putting on this generation.” It’s a travesty marked with bipartisan legislative fingerprints.

The 2013 Legislature took a different tack. It raised taxes enough to send higher ed $250 million in new money over the next two years. It then attached several performance strings to those funds, the largest being a tuition freeze. The Legislature has the authority to require as much at the Minnesota State Colleges and Universities. For the constitutionally autonomous University of Minnesota, the Legislature had to settle for a handshake deal with the Board of Regents, which has the final word on tuition.

The deal is holding — so much so that I wonder whether legislators will start thinking they can block tuition increases indefinitely at the University of Minnesota. They shouldn’t. [sic]

Mr. Michael McNabb commented on the Strib website:

The U of M administration increased spending by $1 billion from 2002 to 2012. The fuel for this billion dollar explosion was skyrocketing tuition that rose from $293 million in 2002 to $696 million in 2012. This increase far exceeded the reduction in state appropriations from $643 million in 2002 to $572 million in 2012.

Answer to Question:

Oliver is the one under the bag:

The University of Minnesota administration and the State Legislature are currently engaged in trying to figure out who is more responsible for the tuition fiasco.

But I know someone who ultimately deserves a lot of the blame:

On The Cost of Administration Part IV

The Internal Revenue Service has released its final report on its compliance project on tax exempt colleges and universities. In 2008 the IRS sent a questionnaire to 400 institutions of higher education selected at random. The IRS received responses from 89 large colleges and universities (81 public and 8 private institutions with 15,000 students or more). See the link to the final report in the IRS notice.

The compensation of highly paid individuals was one of the major areas of inquiry. The average total compensation for presidents of large universities was $399,723 and the median amount was $337,881. See Figure 63 on p. 65 of Appendix C of the final report. The U of M president receives a salary of $610,000 plus an annual contribution of $50,000 to his retirement plan plus other benefits, including free housing. 

The IRS collected information on the six highest paid officers, directors, trustees and key employees (ODTKEs) at large universities. (The category includes trustees or regents, the president, the chief financial officer, and other persons in a position to exercise substantial influence over the affairs of the institution.) Among the deans in that category the average total compensation was $261,528 and the median was $230,137. See Figure 63 above.

The U of M has nine deans who receive annual salaries in the range of $231,600 to $444,367 and nine associate deans who receive annual salaries in the range of $232,862 to $368,461 (fiscal year 2012). See Minnesota Public Salaries. Their total compensation, including their employee benefits, would be greater.

The Carlson School of Management deserves special attention. The dean collects an annual salary of $444,367, two associate deans receive annual salaries in excess of $365,00, and another associate dean has an annual salary of $309,000. For more on the business school see Going To Market Part II.

The U of M also has three chancellors with annual salaries in the range of $201,904 to $276,560 and a vice chancellor with an annual salary of $316,539 (fiscal year 2012).

The IRS also obtained information on the five highest paid non-ODTKEs at large universities. Among the senior administrators in that category the average compensation was $217,131 and the median was $174,273. See Figure 62 on p. 63 of Appendix C of the IRS final report. 

The U of M has seven vice presidents who collect an annual salary in the range of $217,756 to $425,000 and nine associate vice presidents with annual salaries in the range of $201,737 to $407,897 (fiscal year 2012). See Minnesota Public Salaries above.

The law restricts the pursuit of personal wealth by the leaders of private tax exempt organizations. Section 4958 of the Internal Revenue Code imposes an excise tax on excessive compensation paid to ODTKEs of private colleges and universities. Section 4958 does not apply to public colleges and universities as those institutions are classified as units of government. As a consequence, the IRS did not determine whether the compensation of ODTKEs at public colleges and universities was reasonable. See pp. 14-15 of the final report.

But we must be concerned with the reasonableness of the compensation of senior administrators at the U of M--and not simply by comparison to compensation levels at other large public universities. Until recently no one has been watching the store anywhere in higher education. See State (and) University Part II and Nice Work If You Can Get It.

We should consider the compensation paid to senior administrators in state government who have similar qualifications and duties. We should also review the increase in administration at the U of M over the past 40 years. If there has been an increase in the number of administrators that is disproportionate to any increase in the number of students or in the level of research, we should ask why. If there has been a substantial increase (in constant dollars) in the compensation of any administrator, we should ask why.

Michael W. McNabb

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

University of Minnesota Alumni Association life member