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Board of Regents March 2010 meeting summary

Regents hear reports on economy, Biomedical Discovery District, and the U budget

By Adam Overland

3x3-3 economy event

March 16, 2010

The Board of Regents met March 12 and 13. State economist and U professor Tom Stinson was back, giving an update on the state’s economic forecast. We last heard from Stinson in early winter when the forecast was as grim and gray as the impending season. Not much has changed as we head into spring, although there are some hints of optimism, at least in the near term. Since November, said Stinson, the budget outlook has improved from a deficit of about $1.2 billion to about $1 billion for the 2010-11 biennium. Estimates for real gross domestic product growth have inched up slightly from 1.4 percent in the November estimate to 1.8 percent in February’s estimate. Budget planning estimates for 2012-13, however, now show a shortfall of nearly $5.8 billion, $363 million more than projected in November, inevitably resulting in a heightening of the so-called cliff that will occur when federal stimulus money, which has aided the University, will no longer help to offset the shortfall.

Stinson said total wages paid in Minnesota aren't expected to return to pre-recession levels until late 2011, and Minnesota employment won’t reach pre-recession levels until nearly 2013. When all is said and done, said Stinson, Minnesota will lose approximately 160,000 jobs.

Stinson said the way to future growth in the state is productivity--producing better quality and new and innovative products, which in turn will lead to the development of new markets. Research and development will play a substantial role in the idea generation necessary to the state's future success, said Stinson. He added that while the University is not the only contributor, (the private sector will play a significant role as well), the U is a leader in the state in research and development expenditures.

Stinson also cited an upcoming event on Minnesota's economy to be hosted at the University called "Minnesota’s Future: 3x3 – 3 Evenings, 3 Critical Issues Facing Minnesota, 3 Solutions." Moderated by leading University scholars, the three forums will discuss solutions to the challenges facing Minnesota’s economy and business climate, health care system and education and workforce development.

Biomedical Discovery District
Senior vice president for health sciences and dean of the Medical School Frank Cerra and CFO Richard Pfutzenreuter presented to the board on the ongoing development of the Biomedical Discovery District. Pfutzenreuter said that when the Biomedical Science Research Facilities program was presented to the legislature in 2008, no one predicted the current economic downturn. Despite that, he stressed, the University remains committed to the vision of the district, but has made some alterations to the next project. For example, the target hiring for new faculty has been reduced from 120 to 40 over the next five years, and space utilization will feature more shared research and common space. Cerra said the facility will address existing AHC, Medical School, and IT space limitations; 40 current faculty will relocate to the new buildings, allowing for renovation of existing buildings.

"Clustering faculty, support staff, labs, and equipment from these programs in a way that the design of these facilities promotes productivity is really what's underneath this," said Cerra. "By moving people around we can create affinity groups—we will combine disciplines, and put the faculty and facilities together—that is where we’ll find innovation and that productivity," he said.

Cerra said that the interest of new venture money coming into the state to build jobs around the facility has already begun. Private companies, both in and out of state, are looking to invest in a biosciences park in order to capture the technology development and accelerate it into the private sector. "We are the engine that is going to drive the biomedical sciences in the state of Minnesota, and it's the state that will win," said Cerra. Cerra noted that the creation of short-term construction jobs from the project will number more than 5,000, while for every million dollars of new NIH money, 38 to 40 new jobs are created.

Report of the President
On Friday, President Bruininks stated in his report to the Board of Regents that the University has already reduced its budget by close to $190 million for the current biennium, not including the governor's recent additional $36 million unallotment. During the past academic year, administrative support unit budgets were reduced by about 5.7 percent, he said, while academic units were asked for an average reduction of 5.5 percent. Halfway through the 2010-11 biennium, the U is down about 600 full-time employees, halfway to its projected total of approximately 1,200 fewer employees (primarily through voluntary means and normal attrition). Currently, academic and administrative units are modeling a 2.75 percent reduction for FY 2011-12. Any reduction is always difficult, said Bruininks, considering that in any given year, 70 percent of University expenditures are related to people costs (compensation).

Bruininks said that the entire statewide U community will need to be engaged in setting priorities for the future, identifying the programs that need to be reduced, consolidated, and in some cases, eliminated.

In other news
Recognition of McKnight Land-Grant professors
Ten junior faculty members who have been named McKnight Land-Grant Professors for 2010-12 were recognized by the Board of Regents March 12. The award aims to advance the careers of the University’s most promising junior faculty at a critical point in their professional lives.

Carlson recognized

Retiring CEO of the Alumni Association Margaret Carlson was recognized by the Board for her 25 years of dedicated leadership and service.

Conflict of interest policy
The regents approved a revision to the Board of Regents policy on conflict-of-interest. Details of the administrative policy are still being refined. Vice president Kathryn Brown said that one principle of the policy states that those engaged in higher-risk activities, such as researchers working with human subjects, would have higher reporting standards. More details are available on pages 59-63 of the Board of Regents March 12 docket. The amended policy PDF is also online.

EFS presentation
A presentation on the Enterprise Financial System by Michael Volna, University controller, detailed improvements to the system's operational effectiveness, including fixing many of the system defects that caused complaints among users. Frequency of "batch failures," in which technicians would need to enter the system and manually fix something, is down from 8 to 12 issues over a biweekly period to 1 or 2 occasions—considered stable for a system of this size.

Crookston community service award
The University of Minnesota, Crookston was recognized by the president for having been named to the 2009 President's Higher Education Community Service Honor Roll—the highest federal recognition of a college or university for community service involvement.

UMR campus expansion
The purchase of 701 S. Broadway in Rochester for future expansion, and a 10-year lease of office, classroom, and student housing space was approved for the UMR campus.

For more information, see the March meeting docket materials.