As the University of Minnesota navigates declining state funding, administrators are examining where theyâÄôre spending the most money.

The UniversityâÄôs biggest expenses are employee pay, student financial aid and utility costs, according to a report presented to the Finance and Operations Committee of the Board of Regents on Thursday.

These three expenditures, some of the UniversityâÄôs biggest cost drivers, consume about 75 percent of University non-sponsored spending, which excludes most research. The University has $2.8 billion in its non-sponsored funds, which are the âÄúnormal, day-to-day, bread-and-butter operating budget of the University,âÄù University Chief Financial Officer Richard Pfutzenreuter said.

Since 1997, the non-sponsored budget has grown by an average of 8.1 percent annually.

âÄúWeâÄôve added employees, weâÄôve added square footage and weâÄôve increased student enrollment, and those items do drive costs at the University,âÄù Pfutzenreuter said.

There has also been an increase in University dollars because of the increase in people at the University, Regents Chairman Clyde Allen said. Since 1997, enrollment has increased by 22 percent.

But while the budget and enrollment grow, state appropriations have dropped from $709 million in 2008 to $591 million in the current fiscal year.

âÄú[The reductions] affect the University because we donâÄôt have state money to make new investments, build new programs and maintain the normal operating bills that a large institution has,âÄù Pfutzenreuter said. âÄúBills donâÄôt go away even though the state money goes down.âÄù    

In ThursdayâÄôs meeting the committee discussed trends in cost drivers and how to deal with them in the future. The committee plans to revisit the topic in the spring.

Many of the UniversityâÄôs budget adjustments since 1997 have come in cutting back on various cost drivers, Pfutzenreuter said.

However, there havenâÄôt been cuts to student aid, which Pfutzenreuter called a priority despite declining funds. But the University has been working to reduce utility costs.

 âÄúWe are embarking on an aggressive plan to try and reduce the overall square footage of the campus by taking buildings offline and eventually taking them down to save on utility costs,âÄù Pfutzenreuter said.

As the administration and the Board of Regents talk about the future of the University, itâÄôs crucial to recognize and address cost drivers, Pfutzenreuter said.