U administrators must cut $6 million despite tuition hike

K.C. Howard

State legislators, the governor and the University engaged in a battle over higher education funding this legislative session. In the end, the University received half its requested $221 million increase and an invitation from the Legislature to return in the 2003-04 session with conspicuous accountability and tightened institutional goals.

Gov. Jesse Ventura challenged the University to cut its fiscal fat, while the institution maintained it has none to cut.

In light of a 13.8 percent tuition increase facing University students, The Minnesota Daily met with key players in the Office of Budget and Finance to mull over the institution’s financial situation.

In the next year, Richard Pfutzenreuter, vice president for the budget office, must cut $6 million from the University’s budget in accordance with the regent-approved 2002-03 biennium budget.

“There’s always ways to cut costs,” Pfutzenreuter said. “It’s going to come down to people. We’re a people-intensive business.”

About 65 percent of University expenditures are people-related, Pfutzenreuter said. University administrators left for an executive committee retreat Tuesday where Pfutzenreuter said they will discuss positions and expenditures to find $6 million in cuts.

In the last decade, the University has embarked on an administrative aggrandizement. In fiscal 1992 the University had 643 administrative employees; in fiscal 2001 there were 1,236, according to the Institutional Research & Reporting Web site. IRR director Peter Zetterberg said the definition of administrator – which traditionally runs the gamut between associate deans and University President Mark Yudof – is any University employee with administrative functions including fund-raisers, clinical supervisors and legal counselors. To avoid duplicate positions and save central administration resources, Yudof has eliminated two traditional administrative positions since 1996: senior vice president for finance, and treasurer.

“I’m working hard,” said Pfutzenreuter, who absorbed the eliminated positions’ duties for no extra compensation.

The College of Education and Human Development is one University unit that bolstered its administrative positions this past decade. It also decreased its reliance on tenured or tenure-track faculty members.

“While it is true that we have fewer tenure-track faculty now than a decade ago, we actually have more professional employees of all types,” said CEHD Dean Steven Yussen, “because we do much more work of all sorts and not all that work could possibly be done by tenure-track faculty.”

CEHD, like other colleges, shifted its emphasis to field-based classes, which require clinical supervisors rather than classroom professors. The college also increased programs for working educators. Formal teaching represents 40 percent to 45 percent of the total workload at the college, and out of between 400 and 450 CEHD employees, only 30 percent are tenure-track faculty, Yussen said.

As a whole, the University has decreased tenure or tenure-track faculty by 193 positions since 1992.

And then came PeopleSoft

Pfutzenreuter attributes administrative position increases to the University’s growing dependency on technical support. “They say that computer systems reduce staff or that Web sites make things more efficient, but that’s not true,” he said.

In 1996, the University began using PeopleSoft, a computer program handling human resources, payroll and student administration data. The first-generation software delayed students’ financial aid and registration when first implemented and cost the University more than $60 million. The system’s original cost was $42 million. Pfutzenreuter said PeopleSoft increased the need for technical support positions because of the growing demand for information.

Steve Cawley, vice president for the Office of Information and Technology, said his department added eight technical support positions with the introduction of PeopleSoft. Larger units such as the Academic Health Center were able to centralize and cut positions through the program’s efficiency, he said. Smaller departments – such as the budget office – not originally equipped to handle such massive information requests were more likely to add technical support positions.

“I think it turned out to be a good decision even though it was really painful at first,” Cawley said, adding that PeopleSoft now runs smoothly.

And then came construction

The University currently has more than 16 major construction projects, each costing millions of dollars. While state bonding pays for two-thirds of each project, the remaining one-third comes from University tuition dollars, indirect cost recovery funds and central reserves. The institution carries more than $537 million in debt.

“(The debt) is all construction,” Pfutzenreuter said.

Last year the University allocated $13.8 million – a combination of state and tuition dollars – to the escalating debt. In 2001-02, the University will use $18 million of state and tuition funds for the same purpose.

The most expensive projects include the Riverbend Commons parking garage – which will cost the University $54 million in bond proceeds – and Coffman Union, which will cost students $91 a year in student fees and leave the University $51 million in debt.

Regent David Metzen said he did not foresee the consequences when he and other regents approved major construction projects several years ago.

“I think the economy was in good shape and a lot of things have changed in three or four years. You make the best decision with the information available,” he said.

Metzen also said he believed Yudof should re-evaluate the University’s capital budget request for next session because adding more projects will only increase overhead and debt expenses.

But others argue years of maintenance neglect in the mid-1990s forced the University to invest in facilities.

“You couldn’t make the University competitive in this country if you just let the academic buildings fall apart. And they were,” Pfutzenreuter said. “The sad thing is you’ve got to make up for many, many years of neglect.”

Still a good product

To make up for the lack in state funding, the University raised tuition and internally reallocated $103,327,000, including $54,287,000 in cutbacks.

But despite per-semester tuition increases of $451 for in-state students and $1,331 for out-of-state students, and despite significant programmatic cutbacks, University officials maintain quality will not decrease. When regents approved the 2002-03 budget last week, it included investments such as a $12-an-hour rate for minimum-pay employees working 75 percent of full time, a 3 percent increase in base faculty salaries and $10 million for enhancements to the student experience.

“I still think it’s a pretty good bargain for the return,” Pfutzenreuter said.

“We could have just taken that and gone back to a lower tuition increase and said, ‘Gee, we’ll watch quality decline, and we won’t make investments.’ We’ll not do the things we hoped to accomplish with PeopleSoft – get people their bills on time – and wait for a different governor and a different Legislature to come along and give state money to us to make it up. But the fact is, when you look over the last 20 years, it hasn’t happened,” Pfutzenreuter said. “So what do you do?”

A glimmer of hope

With the state surplus at $91 million – larger than expected – Rep. Lyndon Carlson, DFL-Crystal, and a member of the Higher Education Finance Committee, said he thinks the University should request more money for the operating budget next session. Typically the Legislature only grants operation allocations to state agencies during odd-numbered years.

“If (the growing surplus) continues into the second year of the biennium, it would be my hope that the University and MnSCU would ask for a supplementary budget in the second year,” Carlson said. “Maybe there is a glimmer of hope even before the next budget cycle.”

K.C. Howard welcomes comments at [email protected]