Skeptical legislators

Coralie Carlson

Sean Madigan
When legislators asked Bob Zajac, a third-year medical student, how long it will take him to pay off his student loans, he didn’t flinch, responding: “It will take forever.”
Zajac testified before the House higher education committee on Wednesday, giving committee members a student perspective on the rising cost of a medical education. His appearance capped off the Academic Health Center’s 90-minute budget presentation, which requested $37 million to help bridge the gap between inflated costs and diminishing revenue funds.
The higher education committee will draft a spending bill for the University’s $1.2 billion budget request, which will include the health center. A final bill is expected to emerge from the Capitol in April.
During the presentation, legislators questioned the plea to lower tuition costs. The average medical student graduates $80,000 in the red, said Frank Cerra, senior vice president for health sciences. Cerra said he didn’t want drastic tuition hikes to help subsidize the Medical School’s financial woes.
Rep. John Tuma, R-Northfield, asked Cerra about the medical students’ starting salaries after graduation, which range from $120,000 to $250,000.
“If you can get out of medical school, you can afford your debt,” Tuma said.
But Cerra argued that increasing tuition would limit the pool of top students who could afford a medical education at the University.
He also noted that students like Zajac need to pay the interest on student loans up front, a burden many students can’t carry.
Tuma still wasn’t convinced. He said the University is good at rolling many smaller issues into a single large one; he thought the tuition appeal was used to draw sympathy to the larger, $37 million request.
“They are asking for dollars to recruit the best professors. If you recruit the best professors, the students will come,” Tuma said of the access debacle.
He suggested that the health center solve their access problem internally by offing scholarships to students unable to afford higher costs.
But Cerra maintains that tuition is just one of many financial burdens saddled by the health center.
“Even if they gave us grant money for scholarships, we still have a $20 million problem on our hands,” Cerra said.
The health center’s multi-million dollar dilemma stems from cutbacks in federal funding and other traditional revenue sources.
The $37 million request would subsidize:
ù $8.6 million for a loss of clinical revenue from University doctors who see patients. Forty percent of the Medical School’s budget comes from clinical revenue.
But in recent years, HMOs have been paying industry doctors less for services, forcing University doctors to lower their prices to stay competitive.
“The whole system is squeezing the education and research side under the new regime,” Cerra said.
ù $21.4 million to educate students in non-hospital settings, like clinics, and to strengthen preventative medicine programs.
ù $7 million to re-design curriculum and establish new faculty positions.
In a request outside of the University, health center officials also asked legislators to give $100 million to a trust fund called Minnesota Education and Research Costs. The fund is for graduate health professional education and is managed by the Minnesota Department of Health, not the University.
Traditionally Medicare subsidized funding for medical students’ residencies. In 1997, the Balanced Budget Act cut this support, so the Minnesota trust fund would be left to pick up the slack.
This year the University residency students will receive $45 million in Medicare funding, filtered through the state Department of Health. After five years, that amount will decrease by about one-third, Cerra predicted.
Although University officials asked the higher education committee for an appropriation, Gov. Jesse Ventura proposed creating a medical research endowment to fund the school from last year’s $7 billion tobacco settlement.
The $350 million endowment would generate $39 million in revenue for the health center over the next year, according to Ventura’s budget summary.
Yudof said although he would prefer to set up a lasting endowment so the University doesn’t have to request funds each year, he wouldn’t be disappointed with an appropriation.
“Needless to say, we’re flexible,” he said.