A financial crossroad: U to narrow academic focus

Tuition surpassed state funding as the biggest contributor to the University this year.

by Taryn Wobbema

Decreasing state aid and increasing tuition is forcing the University of Minnesota to function more independently of the state financially and narrow academic focuses to invest in its most promising areas. Administrators deny the course will provide less access for students of varying economic backgrounds because private donations and financial aid will help the University balance the cost to students. âÄúItâÄôs clearly a direction policymakers have been pointing us to for decades,âÄù Richard Pfutzenreuter, chief financial officer, said of the rising cost of education. âÄúIt seems like an unstoppable trend.âÄù Declines in state funding have forced the University to start developing long-term financial plans to close an anticipated revenue gap. After a task force report to the Board of Regents on Oct. 8, it became clear that tuition has become the largest revenue source for the University. This year, tuition makes up 26 percent of the UniversityâÄôs budget while state appropriations contribute 21 percent. This is the first year tuition has surpassed state funding, according to the task forceâÄôs report. In the past, Sen. Sandra Pappas, DFL-St. Paul, the chairwoman of the Senate Higher Education committee has said the University remains a bargain for families that would have otherwise opted for a private school, but others struggle to pay for schooling. Administrators pointed to the UniversityâÄôs Promise Scholarship program that guarantees free tuition for low-income Minnesota residents who qualify for the federal Pell grant. A new initiative this year gives students from Minnesota with a family income of less than $100,000 up to $1,750 in scholarships. Michael McPherson, president of the Spencer Foundation âÄî an organization dedicated to researching all levels of education âÄî said it is a definite trend that states are allocating less to state colleges and universities, forcing those institutions to increase the cost to students. McPherson said public institutions donâÄôt have much choice; they âÄúeither lower the quality or raise the price.âÄù With a goal to become a top research institution, the University has made clear that itâÄôs committed to increasing, not decreasing, quality. According to the task force report, the University will work on identifying specific areas of âÄúexcellenceâÄù and funneling funds there. Besides cutting costs, this would be in an effort to bolster the UniversityâÄôs reputation in the higher education marketplace. Specific areas of excellence have not been identified. âÄúIf we continue to try to do everything weâÄôve been doing, itâÄôs going to be an inch deep,âÄù Pfutzenreuter said. Focusing on fewer areas but providing substantial funding to those areas will provide that increased quality. Clyde Allen, chairman of the UniversityâÄôs Board of Regents said the UniversityâÄôs goal to become a top three research University shows more progress in some areas than others. According to data from 2007, the University ranked 10th among U.S. public research universities in total research expenditures. âÄúWe are the stateâÄôs only research and land grant university, so that puts a special set of responsibilities on us,âÄù University President Bob Bruininks said. âÄúThis University has not diminished its broad access to students.âÄù Bruininks said the trend to financial independence from the state is not favorable. University administrators will push for higher education to receive more attention from the state. Administrators told lawmakers last session that they couldnâÄôt foresee the University ever operating without state funding. Until funding increases, Bruininks said he suspects more students will enroll in community colleges to lower costs and later transfer to a four-year institution. But tuition can only solve about a third of the problem, Bruininks said. The second aim of future financial planning revolves around the evaluation of every activity the University conducts to look for ways to prioritize programs and departments âÄî academic and administrative. âÄúThe breadth of what the University does is important to the state, but with the state funds declining, the University needs to take a sharp look at what we can and canâÄôt do,âÄù Pfutzenreuter said.