University slated for $20 million cut to administrative spending

President Kaler’s budget for next year axes more than 100 top leadership positions.

by Anne Millerbernd

The University of Minnesota’s administrative spending is slated for $20 million in cuts next year.

President Eric Kaler proposed the cuts at a Board of Regents meeting earlier this month as part of a larger plan to reduce administrative spending by $90 million over six years, following widespread criticism of the institution’s pay to top executives.

The plan cuts 115 full-time administrative positions, mostly through methods like retirement, voluntary layoffs and by leaving some positions vacant when employees’ contracts expire, said Associate Vice President for Budget and Finance Julie Tonneson.

Administrative employees will feel the weight of $20 million in administrative cuts as part of the institution’s $90 million savings goal, and University managers say those cuts will eliminate positions and create more work for current employees.

Jobs cuts include two associate program director positions in the College of Biological Sciences and 12 spots in the College of Education and Human Development.

Most of the 12 employees have already left CEHD, said Ryan Warren, its chief of operations. The rest will be gone by the middle of June, he said, with their removal saving the college about $1.1 million each year.

While the cuts will bring more savings for CEHD, Warren said employees will have to take on extra work.

“The people we have are now doing more because we have fewer people to do the work,” he said.

As University positions are eliminated, managers have to find ways for employees to work more efficiently or delegate duties among themselves, said University Chief Financial Officer Richard Pfutzenreuter.

Facilities Management, where seven positions are set to be eliminated by the end of next fiscal year, has made adjustments in how it responds to work orders so that fewer employees are required, said Associate Vice President for Facilities Management Mike Berthelsen.

University administration set a goal for Facilities Management to reduce its budget by more than $1 million to help reach Kaler’s goal, which Berthelsen said was met by cutting positions.

‘A people business’

While cutbacks in spending on expenses like travel, food and other supplies will contribute to the $20 million savings, Pfutzenreuter said removing administrative positions will have the greatest impact.

“We’re a people business, so the vast majority of it is going to be people,” Pfutzenreuter said.

About 80 percent of the savings will come from cutting administrative jobs, Tonneson said.

Making additional cuts each year will be difficult, Pfutzenreuter said. And to avoid layoffs, administrators will have to carefully search for areas where employees are retiring, he said.

“I think the president would acknowledge … that it’s going to get harder and harder,” Pfutzenreuter said.

Report: a top-heavy U

The University has been under fire from the state Legislature and in the national media for its spending on leadership.

And last week, a report by the left-leaning Institute for Policy Studies ranked the University as the nation’s fourth “most unequal” public university in its student debt, spending on executive pay, and usage of adjunct or contingent faculty members.

The original report — titled “The One Percent at State U” — placed the University at No. 3 in the country, but IPS took it down the day it was published, citing faulty data from a source, and reposted an updated version three days later.

This isn’t the first time the University’s administrative spending has fallen under national scrutiny. A 2012 Wall Street Journal article also accused the institution of administrative bloat, prompting legislators to request an external review of University spending.

Though that review concluded the University’s administrative spending was on par with peer institutions, Kaler announced a plan in September to cut administrative costs by $90 million over a six-year period. The institution successfully cut $15 million in the first year.

Despite the University’s efforts to cut back, the latest version of the IPS report singled it out for excessive spending, accusing the University of increasing its nonacademic administrative spending by more than 40 percent from fiscal year 2007 to fiscal year 2012.

The University issued a public response to the original report, saying the authors used inaccurate data and presented “a misleading picture” of the University. The administration’s opinion didn’t change with the revised report, said University spokesman Chuck Tombarge.

Kaler contested the data after IPS released its original report, noting that the University has cut down on administrative spending during his presidency.

“The important work we’ve done over the past 2 ½ years to really move on operational excellence is completely ignored by this report,” he said.