Officials hedge on size of tuition

by Paul Sand

After listening to a historical perspective on the University’s revenues and expenditures, the Board of Regents discussed on Thursday the institution’s financial future – including new revenue sources such as tuition hikes and bonding to supplement lost state funding.

While the presentation gave regents a perspective on how the University spent and made money in instruction, research and public service missions, it also laid a foundation for some tough economic decisions given the estimated $4.2 billion state deficit.

University Chief Financial Officer Richard Pfutzenreuter presented the report and said tuition will increase given the state’s possible funding reduction. He would not, however, say how much tuition rates might increase.

“There is no way to speculate until you know what the governor’s number is,” he said.

He said tuition revenue and state funding support direct instruction – primarily faculty and staff salary and benefits.

Republican Gov. Tim Pawlenty is scheduled to announce his 2004-05 state biennium budget Tuesday. State lawmakers must reach an agreement on the budget, including any cuts, by June 30.

Some of the University’s peer campuses, including the University of Pittsburgh and Penn State University, operate with tuition rates as high as $8,000, said Peter Zetterberg, University Institutional Research and Reporting director.

He also said besides market pressure, there is no limit to how much University tuition rates can increase.

Zetterberg said the University should focus on how quickly tuition might increase, rather than how much it will increase.

“I think the shock in all this is how quickly things will change,” he said.

Regent Peter Bell said he was not interested in looking at cutting University programs, but instead in new ways of generating revenue, including bonding.

While University President Robert Bruininks said bonding is an appropriate way to finance building projects, he cautioned against using it for the University’s operating costs.

“We must be careful because a lot of what the University does is long-term and reoccurring,” he said.

Scouring reserve funds and issuing bonds are only temporary fixes that do little to help the University’s long-term financial status, Bruininks said.

Regent Dave Metzen echoed Bruininks’ statements and said looking for new sources of revenue should be a top priority for the University.

Bruininks said potential revenue sources could be generated by charging user fees on free University services or raising fees on existing charges.

For instance, the University provides technical services such as environmental and water testing to communities, but those prices might be below market demands, he said.

“Public institutions are not fat, but they haven’t been sufficiently creative in finding new revenue sources,” Bruininks said.

Today Bruininks will speak to the entire Board of Regents outlining a schedule for balancing the University’s budget. He will also reveal a revised financial framework for future University administration decisions.

Paul Sand covers the University Board of Regents and administration. He welcomes comments at [email protected]