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The Minnesota Daily

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The Minnesota Daily

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Colleges end fiscal year with surplus

Most college students don’t have a lot of extra money after paying their bills.

But for many of the University’s colleges, having additional money left over each year is not such an uncommon event.

Nearly every college has a year-end carry-forward, the financial resources remaining in the budget after paying all of a college’s expenses, University officials said.

“If they don’t spend all the money in their budget, it carries forward into the next year,” said University chief financial officer Richard Pfutzenreuter.

At the end of fiscal year 2000-01, the Carlson School of Management had an extra $13 million in the bank, according to a University budget report.

Most college carry-forwards grow from fiscal year to fiscal year, which run from July 1 to June 30, according to the budget report.

“It’s not ‘use it or lose it,'” Pfutzenreuter said, referring to the more standard form of budgeting, in which unspent money is returned to a central account.

The University uses a decentralized budget model, in which individual colleges are responsible for managing their budgets, Pfutzenreuter said. “It’s a much better model because the (colleges) are responsible for more of their costs.”

Decentralized budget models are a trend in other Big Ten universities, where carry-forwards have also become commonplace.

At the University of Illinois, individual colleges are only allowed to keep 30 percent of their total budgets as a carry-forward, said Randy Kangas, assistant vice president for budget and planning.

According to budget reports, the top five colleges at the University with carry-forwards are: Institute of Technology, $53.3 million; Medical School, $48.8 million; College of Liberal Arts, $33 million; the Graduate School, $15.1 million; and Carlson School of Management, $13 million.

But University officials warn that looks can be deceiving.

“It’s dangerous to make assumptions on those figures,” said Carlson School chief financial officer Gerald Hallenbeck. “We don’t have pots of money.”

Mike Rollefson, associate to the vice president and dean of the Graduate School, said because of the way the dollars are committed, they appear more inflated they actually are.

The money could be committed to a variety of sources, including recruiting faculty, funding research and replacing equipment, officials said.

Steven Crouch, associate dean of IT finance and planning, said approximately $15.5 million of the college’s carry-forward – not including endowment or foundation money – is allocated for faculty use.

“Funding is used by the faculty to support research programs, purchase equipment, travel and hire graduate students or support staff,” Crouch said.

Money from endowments, faculty chairs and research funds are included in carry-forwards, but there are guidelines on how the money can be spent, officials said.

For example, money from an endowment for recruiting faculty cannot be used for other departmental expenses, Crouch said.

Steven Rosenstone, dean of CLA, said it’s important to remember carry-forwards are not all liquid cash.

Also included in carry-forwards are assets such as the unused gold fillings purchased by the School of Dentistry and the cows raised at the College of Agricultural, Food and Environmental Sciences, Pfutzenreuter said.

Salaries from vacant faculty positions help inflate carry-forwards as well, Hallenbeck said.

College officials said maintaining the carry-forwards is important for managing future expenses.

“If we know we have a bill to pay, rather than worrying about money, the funds would be sitting in the balances,” Rosenstone said.

University officials said they are now worried about running a deficit while facing a $23 million cut in University funding from the state, and carry-forwards could be a funding solution.

“People could use the money to bridge gaps in funding,” Pfutzenreuter said.

Brad Unangst welcomes comments at [email protected]

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