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Board of Regents meeting summary, October 2010

The October Board of Regents meeting dealt primarily with financial issues

By Adam Overland


October 12, 2010

The October Board of Regents meeting dealt primarily with financial issues, including a report on the University endowment as well as the biennial budget request for FY2012-13.

Chief investment officer Stuart Mason told the finance committee that the U had approximately $1.7 billion in assets as of June 30. The consolidated endowment fund was valued at $861.5 million, up $34.3 million over the last 12 months. Short-term reserves were up nearly $102 million over the same period, to about $700 million.

The overall picture presented was one of improvement over a the previous year, a difficult one for investments. In fiscal year 2009, the U's endowment slumped more than 20 percent.

Biennial budget request
President Bruininks presented to the board his recommended state biennial budget request for 2012-13, which the board will act on at its November meeting. Although the state of Minnesota is facing a nearly $6 billion budget deficit, Bruininks said the state legislature raised the U's base appropriation level last session from $591 million to $642 million. The University request will be to retain the $642 million appropriation.

Bruininks said the U realizes it may not receive the entire request, but that it must press forward. The cost of not investing in the University now will be extraordinary, he added. The request amounts to $102 million over the current base from the state over the next two years. $19.6 million of that would be used for faculty positions and another $19.6 million would go towards student financial support. $63 million in core costs at an inflationary factor of one-and-a-half percent would go toward meeting core costs like increases in compensation and operations.

CFO Richard Pfutzenreuter said that it is difficult to predict what might happen regarding the budget request without a clear picture of who will be the next governor of Minnesota, as the candidates have significantly different views on how they would approach funding for higher education.

Key to the U's future, said Pfutzenreuter in a presentation to the finance and operations committee, will be paying attention to and having a plan for three of the University’s greatest cost drivers—employee compensation, student financial aid, and utilities—which comprise three-quarters of U expenses. The University has made progress in those areas, particularly regarding utilities and space. Efficiency and conservation efforts over the past two years have led to more than $2.5 million in annual energy savings. In addition, the U is working to optimize the square footage of the campus by decommissioning or demolishing obsolete buildings, which saves on utility costs. The U spent almost $225 million in 2010 on utilities.

Despite declining state funding, said Pfutzenreuter, there have not been cuts to student aid.

In other board news
President Bruininks acknowledged the U.S. Department of Education's $45 million grant to the National Center on Educational Outcomes (NCEO) at the University of Minnesota. The grant will fund the formation of a partnership that will develop a new generation of alternate assessments for students with the most significant cognitive disabilities. This new National Center and State Collaborative Partnership (NCSC) will be a collaborative network of national centers like the NCEO and 19 states.

Aaron Friedman was approved by the board as VP for Health Sciences and dean of the Medical School. He was named to the post in September.

The board approved UMR's new mascot, the UMR Raptor.