Serving the UMN community since 1900

The Minnesota Daily

Serving the UMN community since 1900

The Minnesota Daily

Serving the UMN community since 1900

The Minnesota Daily

Daily Email Edition

Get MN Daily NEWS delivered to your inbox Monday through Friday!

SUBSCRIBE NOW

Decentralized money leaves central administration short

One reason the University is struggling with a $23 million budget gap is because it gave a big chunk of its money away.
The money didn’t go far.
It can be found in the individual colleges at the University rather than where it used to be — in the University’s central administration.
In 1996, the University adopted a decentralized approach to tuition allocation that directed 19 percent of its funding to individual colleges.
A student’s tuition is now divided between the college offering the course and the student’s college of enrollment. Indirect cost-recovery revenue, money allocated to the University to pay for additional costs incurred with research projects, is split between the colleges and central administration. The funding does not include sponsored research revenue.
The plan cut the central administration’s revenue in half — money used for University-wide resources and services and new strategic academic investments.
Bob Kvavik, associate vice president, said the budget plan did exactly what it was supposed to: “The money goes immediately to where the students are.” This allows colleges flexibility to respond to student and program needs, he said.
Instead of University revenues filtering through a bloated centralized administration, with a hidden traffic of dollars, the new budget plan sheds some light on expenditures.
Kvavik said before the plan was implemented, everybody wanted to share responsibility of how to spend University money, but few worried about how the University obtained revenue. Now, he said, everyone cares more about how to raise money.
However, by taking tuition revenues away from administration, the University could no longer raise money other than through state appropriations. And, with a smaller-than-expected appropriations increase this past year, the University was forced to scramble to pay for its debt, utilities, libraries and technology.
University President Mark Yudof said he likes the flattened and decentralized plan. He said he prefers a process “that makes us do government in the sunshine.”
However, the budget plan is “deeply flawed,” he said. “By giving away most of the cash flow, there was no money to pay overhead.”
In years past, the problem was resolved with emergency or supplemental legislative money.
“The Legislature doesn’t allocate money for overhead,” Yudof said.
So when state money fell short last year, the University struggled to cover costs.
“We can plan ’til the cows come home, but if there is no place in the system to deduct out for your overhead, every year you will have to raise it,” Yudof said.
In May, Yudof asked a budget management task force — comprised of deans, vice presidents, financial managers and faculty members — to review the plan.
Eight months later, the group produced recommendations to solve this year’s $23 million budget gap, as well as the persistent structural issues that regularly produce such gaps.
Yudof has already proposed one change — increasing tuition — to the Board of Regents.
Other suggestions include taxing the University units and legislative money going directly to academic programs to get back campuswide expenses, targeted reductions and increasing efficiency.
“Everyone has to step up and be a part of this,” said Steve Rosenstone, dean of the College of Liberal Arts and the task force’s chairman.
Shared responsibility is the only way the University can deliver the “best damn education … anywhere in the world,” he said.

Kristin Gustafson covers University administration and federal government and welcomes comments at [email protected].

Leave a Comment

Accessibility Toolbar

Comments (0)

All The Minnesota Daily Picks Reader Picks Sort: Newest

Your email address will not be published. Required fields are marked *