Regent vote freezes tuition

The newly approved budget will still increase tuition for non-resident and graduate students.

by Janice Bitters

A study on administrative spending at the University of Minnesota said the University isn’t outspending its peers in most areas.

But some have criticized the cost of the study and the fact that much of the data on spending from other institutions is incomplete or estimated — with up to a 25 percent margin of error.

Sen. Terri Bonoff, DFL-Minnetonka, said that while she is glad the University is looking at administrative costs, she was disappointed with the vagueness of the report, which “lacked depth.”

“There’s a couple other firms that they could have used,” said Bonoff, who is chair of the Senate Higher Education and Workforce Development Division. “One of them … does benchmarking for almost all the universities, and they would have had a stronger database for the survey information.”

The 12-week study by Huron Consulting Group was requested by legislators in January after a Wall Street Journal article criticized the University’s administrative spending.

The 175-page report focused on four key areas: finance, human resources, information technology and purchasing processes.

It outlined multiple opportunities for improvement but also noted the University “is already undertaking major initiatives to promote efficiency and effectiveness and to reduce administrative costs.”

Huron praised the University’s budget model in the report, saying it “promotes financial accountability for each unit and campus.”

Mike Schmit, incoming Minnesota Student Association president, said he was pleasantly surprised the study showed the University in a different light than the Wall Street Journal article.

“I do think these steps that the U has been taking are in the right direction,” he said.

One of the main improvement areas the study pointed to was reporting structures between departments. The University — like many public research universities — operates as a collection of departments rather than a “unified enterprise,” the report said.

The study acknowledged changes to the administrative reporting structure that the University has made to date, but it also said there’s more work to be done.

Huron also suggested the University review job classifications and update them to reflect current and accurate expectations for administrators.

But legislators may be looking for bigger changes.

Rep. Gene Pelowski, DFL-Winona, who chairs the Higher Education Finance and Policy Committee, has been critical of the University’s spending in the last year.

“Reduction doesn’t mean reclassification,” he said. “To reclassify someone doesn’t save on a salary. It might, but probably not.”

Consulting costs

The cost of carrying out the studies has also been a source of criticism from some legislators.

The Huron study cost the University $495,000, and a similar study released in March by New York-based Sibson Consulting cost $48,000.

The Sibson study found the University’s ratio of managers to employees was high in some areas but adequate in others.

Pelowski has been critical of the University for spending money on something “they should have already known.”

“The U should have this as standard operating practice,” he said.

But Schmit said the report is valuable.

“Spending $495,000 up front to save at least $15 million in the next fiscal year I think is already a pretty good return on our investment,” he said.

Sibson will continue an extended study for the University this year, according to a University press release.


Changes in progress

Huron suggested the University work to increase efficiency in various ways, like transitioning from paper to digital forms, for example.

One way the University is already tackling Huron’s suggestions is through an $83.5 million Enterprise Systems Upgrade Program, which is set to be complete in late 2014 and will combine student information, human resources and finance data into one system.

Regent Abdul Omari voiced concerns that nearly $29 million from the upgrade project is for an outside consulting firm, Atlanta-based CedarCrestone, Inc.

“In my eyes, that seems like a very large number,” he said.

The executive oversight committee said the outside firm was needed because the University doesn’t have the capacity or resources to complete the upgrade on its own.