The state Legislature is closer to passing another attempt to curb administrative bloat at the University of Minnesota.
The bill included in the Senate’s higher education omnibus bill would require the University and Minnesota State colleges and universities to report to the Legislature by July 2020 on how they will reduce administrative costs in their schools by 10 percent.
Senators say the bill is a necessary first step before receiving increased state investment for higher education. The bill has a house companion, though it never received a committee hearing.
“We’re asking for a real, hard look at administrative costs,” said Senate higher education committee chair Sen. Paul Anderson, R-Plymouth, the bill’s sponsor. “This is pushing [the University] through the exercise to show us that they’re [cutting administrative costs].”
Administrative spending at the University has been under legislative fire for a number of years. The school has tried to address the problem through initiatives like Operational Excellence, President Eric Kaler’s promise to reduce $90 million in administrative costs by the end of this year.
The University is on track to reallocate around $91 million dollars this by the end of this year, according to Associate Vice President of University Finance Julie Tonneson. But Anderson said the school needs even more accountability.
“My preference in the intent of the bill was for actual cuts — reductions, not just reallocation within the system itself,” Anderson said.
The University defines administrative costs as leadership and oversight, which make up about 8.7 percent of their total budget, said University Senior Vice President for Finance and Operations Brian Burnett at the bill’s Senate higher education hearing in late March.
The University is actively working to reduce costs, Burnett said, by consolidating all finance and human resources staff and implementing new electronic payment methods, among other tactics.
“[Using electronic payment methods] alone saved $6 million. We will continue to make such improvements a priority going forward,” Burnett said at the hearing. “We share your goals to be more efficient, lean and innovative. We don’t believe, however, that this legislation will help us achieve those goals.”
Anderson said the Senate, which has a budget of $100 million to allocate for higher education over the next two fiscal years, will work to increase University funds if the school works to cut administrative costs.
“Maybe we are increasing base funding for both the institutions, [so] we’re also putting in measures that we’re expecting responses and results from,” he said.
Sen. Rich Draheim, R-Madison Lake, said he thinks administrative bloat is a major contributor to rising tuition costs across the state. He sponsored similar legislation two years ago which required schools to report their use of outside consultant firms.
“We’re further down that same line. We need to look at where we’re spending,” Draheim said. “It should be in the classroom, and not for some vice this of that who just shovels paper back and forth a little bit.”
