The Board heard the annual report on U research, an economic update, and more
By Adam Overland
December 14, 2010
State economic forecast
State economist and U professor Tom Stinson presented an overview of the Minnesota budget forecast at the December meeting of the Board of Regents. The state will face a $6.2 billion shortfall in the 2012 and 2013 fiscal years, said Stinson. The amount makes up about 16 percent of total state spending. Stinson said that while employment is recovering faster in Minnesota than the national average, there are still many people out of work. The state lost 157,000 jobs from December 2007 to September 2009, but has added only 55,000 jobs since the September low. The current unemployment rate in Minnesota is 7.1 percent compared with 9.6 percent nationally. The $6.2 billion shortfall is nearly $600 million more than previous estimates, Stinson said.
Stinson also showed that the state is spending more money than it's taking in, a rift made particularly precarious as the federal stimulus funds, which plugged the budget gap in 2010-11, drop away. Stinson said Minnesota received about $2.3 billion in federal stimulus money in 2010-11, calling it a one-time reduction to the budget gap. "We knew it was going to happen. Now we’re going to pay the price," said Stinson.
Stinson said he sees an annual deficit continuing through at least 2015. For more information, see Minnesota Management and Budget.
In his report to the board, President Bruininks called the budget situation the most challenging period for the U and the state of Minnesota in the last 50 years. While the U has been modeling cost reductions in academic and administrative units, Bruininks said the U's financial health would be about more than reductions and internal reallocations. The U will continue to grow revenues related to research and discovery, as well as private donor support, said Bruininks. The U should also continue to seek increased state investment, he said, but added that even maintaining the forecast base will be a struggle this legislative session.
Annual financial report
Chief financial officer Richard Pfutzenreuter presented to the board the University's annual financial report. Among the highlights:
• Total revenues for 2010 were $3 billion.
• Expenditures were $2.9 billion.
• Net assets increased by $171.5 million during 2010, compared with a decrease of $342 million in 2009.
• Total assets increased by about $200 million.
• University liabilities increased by only $27.5 million.
Research performance metrics
In more positive news, vice president for research Tim Mulcahy gave his annual report to the board on the state of the University's research. The U posted significant gains in its research and development (R&D) expenditures, according to the National Science Foundation's (NSF) latest survey, covering 2009. During that time, the U had an 8.5 percent increase in R&D expenditures, with R&D totaling $741 million. The NSF survey ranked the University eighth among public research universities in the nation in research expenditures and 10th among all public and private research Universities. Mulcahy said the top 10 ranking among all research institutions is up two positions since 2005, when strategic positioning began.
Since 2004, said Mulcahy, the U has increased R&D expenditures by 41 percent, one and one-half times the average increase posted by the nation's top 20 universities. "That growth rate is the third largest of any research institution in the country, and the second largest among all public research universities (second only to University of North Carolina at Chapel Hill)," said Mulcahy.
Mulcahy congratulated faculty for a job well done in acquiring American Recovery and Reinvestment Act (ARRA) awards in 2010. Faculty and staff submitted 963 applications and secured 348 awards totaling more than $208 million.
Total grants and contracts awarded to U researchers in 2010 topped $823—a 36 percent increase over the previous year's total. Even after excluding the contribution of ARRA awards, the total of awards sponsored in fiscal year 2010 increased 23 percent. The full annual research report is available online.
Regarding technology commercialization, Mulcahy said that new license agreements were up 50 percent. The U launched eight start-ups in the last year, and revenue-generating agreements are up 30 percent. "It’s phenomenal turnaround, and certainly it is another indication of the U's impact on the local economy, the national economy, and our future," said Mulcahy.
In a report to the Board of Regents Educational Planning and Policy Committee, provost Tom Sullivan and vice provost Bob McMaster gave an update on fall 2010 undergraduate education. Of particular note were the U's honors program students. Sullivan reported that the fall 2010 freshman class in the University’s young campuswide honors program was one of the best in the nation. The class had an average ACT composite score of 31.6, putting it at the top of a distinguished group of peer liberal arts institutions. Among peer STEM (science, technology, engineering, and mathematics) universities, the U's 33.5 average ACT composite tied with the Massachusetts Institute of Technology (MIT), and put it a half-point behind the California Institute of Technology (Caltech).
Much of this may be attributable to UMTC's application rate. UMTC has doubled the number of applicants since 2004, from about 18,000 to 37,000, said Sullivan, while enrollment numbers have stayed relatively the same in that time, enabling the U to be more selective. More than 65 percent of UMTC freshmen were from Minnesota high schools.
Vice provost McMaster reported that the UMTC four-year graduation rates continue to improve, rising from 46.7 percent in 2009 to 50.2 percent in 2010. The regents have set a goal of 60 percent in the next two years. McMaster admitted reaching 60 percent would be a challenge, but expressed optimism.
Other board news
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Last modified on December 14, 2010