The University of Minnesota’s Board of Regents approved a tuition surcharge for the Carlson School of Management on Friday.

The Carlson School will gradually phase in a $2,000 per year surcharge for its undergraduates to add and retain faculty and increase scholarship funds.

Carlson students will see an extra $500 charge to their student accounts for the 2012 year if it’s passed as part of the University’s annual operating budget in June. The surcharge will continue to rise in $500 increments each year until it reaches $2,000 in 2015.

The surcharge will not affect Carlson students eligible for Pell Grants or those receiving the University Promise Scholarships.

Regent Steve Sviggum voiced concern about raising the amount on some while not others. However, Carlson interim Dean Sri Zaheer said it’s necessary to keeping the school accessible to students.

Others were worried that a tuition surcharge for Carlson might lead to other University colleges to mimic Carlson with their own differential tuition hikes.

University President Eric Kaler said that he doesn’t expect that to happen.

“Differential tuition charges will need to meet an extraordinarily high bar,” Kaler said. “I believe this request does.”

State support for the school dropped by $10 million between 2006 to 2011. The tuition hike will offset about half of that loss at $4.9 million in expected recurring revenue.

Zaheer said the school hopes to increase tenure and tenure track faculty while decreasing temporary adjunct professors. The number of faculty has remained relatively stagnant while the number of Carlson School undergraduates increased by nearly 20 percent since 2007.

In her presentation to the board Thursday, Zaheer said that she hopes the funds will be able to decrease Carlson writing intensive average class sizes from 48 to 35.

Other business schools have also used surcharges to better their programs.

“We want to maintain the excellence of the Carlson School,” board Chairwoman Linda Cohen said.

Zaheer said that she doesn’t expect demand for the school to change based on the tuition hike. She said Carlson receives about 14 applications for every spot in the undergraduate class.

In an informal Minnesota Daily survey of more than 70 students, about 80 percent of those who knew of the surcharge described their opinion of it as unfavorable. But more than 90 percent said they still would have chosen to come to Carlson School had the surcharge always been in place

“We have to really train [Carlson students] to learn and for that, there’s nothing better than having research-active faculty to push them in their thinking in smaller classes,” Zaheer said. “We do an extremely efficient job at the Carlson school. Is it the best job? I don’t think so.”

Raising Thresholds

The board also voted to increase the threshold for real estate purchases that would go through the board for approval Friday.

The new policy will allow the University to purchase up to $1.25 million in real estate without going through the board — an amount that was previously capped at $250,000.

While the board also raised the threshold for purchasing goods and services from $250,000 to $1 million with little dispute, the increase on the real estate transaction threshold passed with several concerned voices.

“Increasing the thresholds to this level will pull out from under us the opportunity … to see what’s going on in the coordinate campuses,” Regent Laura Brod said.

Brod said real estate transactions need board review because of their broad effect on the University.

“If we were a private entity, a private corporation, I’d say absolutely get that threshold up,” Brod said. “But we’re not. We’re a public body.”

Regent Clyde Allen was also worried that the change would decrease transparency, but still supported the change.

Kaler advocated for the amendment and asked the board to rely on University administrators’ judgment.

Kaler said that he and his management team would take matters to the board if the purchase had a significant impact on the University, regardless of the cost.

After extensive discussion, the motion carried with two of the regents voting against the change.