Mary Ellen Ritter
The University of Minnesota is preparing to change its definition of administrative costs in its budget proposals to the Minnesota Legislature, altering the amount of money the institution attributes to administrative spending.
The University has changed the definition, but it has not officially applied it to a budget proposal yet.
Over the last 10 years, the University has been required to outline its allocation of state funding for specific areas of spending in its Cost Definition and Benchmarking Analysis presented to the Minnesota Legislature.
Legislators first questioned the recent definition change during a House Higher Education Finance and Policy Committee meeting Jan. 31, when the University presented its initial supplemental budget request.
“We took another round of consultation internally and a lot of conversations to define it,” University Budget Director Julie Tonneson said to the committee during the meeting.
The University requested $302.5 million from the Legislature in its supplemental budget request for the 2024-25 biennium. The committee passed the omnibus higher education and finance bill on April 30, which would allocate about $1.4 billion to the University for the biennium for operations and maintenance. The House approved the bill 69-58 on Wednesday.
The University took a look at its definition of administrative costs in 2021 to align with MPact 2025, according to Tonneson. MPact 2025 intends to increase efficiency within University processes and increase budget savings.
The former categories for administrative costs were referred to as leadership and oversight and mission support and facilities, according to the 2021 Administrative Cost Report.
Costs under this definition for the fiscal year 2021 came out to be about $310 million in leadership and oversight and about $1.2 billion in mission support and facilities; the combined administration costs were about $1.5 billion, according to the expense summary for administrative cost benchmarking for fiscal year 2021.
Under the new definition, the University’s total administrative costs for the fiscal year 2021 would have been roughly $433 million and nearly $450 million in fiscal year 2022.
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