These minutes reflect
discussion and debate at a meeting of a committee of the
Minutes
Senate Committee on Finance and Planning
238A Morrill Hall
Present:
Charles Speaks (chair), Prince Amattoe, Jean Bauer, Stanley
Bonnema, Bruce Brorson, Charles Campbell, David Chapman, Robert Cudeck, Tom Gilson,
Gary Jahn, Abu Jalal, Cynthia Jara, Thomas Klein, Michael Korth, Brittny
McCarthy Barnes, Kathleen O'Brien, Daniel O'Connor, Richard Pfutzenreuter,
Terry Roe, Warren Warwick, Susan Carlson Weinberg
Absent:
Tim Church, Joseph Konstan, Marvin Marshak, Tim
Nantell, Thomas Stinson, Sue Van Voorhis, Michael Volna
Guests:
Executive Vice President and Provost Christine Maziar;
Professor Judith Martin (Faculty Consultative Committee)
Others:
Julie Tonneson (Office of Budget and Finance)
[In these minutes: (1) statement on funding for classroom
upgrades; (2) the budget]
1. Statement on Funding for Classroom
Upgrades
Professor Speaks convened the meeting at
The Senate Committee on Finance and Planning is
repeatedly on record as strongly supporting the “General Purpose Classroom
Technology Upgrade Plan” as the vehicle to increase vitally needed teaching
& learning technology in Twin Cities central
classrooms.
The plan, which was implemented in November, 1999,
calls for upgrading all central classrooms to the “projection-capable
classroom” standard by end FY 04. Of note, in addition to one-time funding for
initial installations, the Tech Upgrade Plan also identifies the life cycle
equipment replacement and maintenance costs, as well as the necessary faculty
support costs, which result from the installation of technology in classrooms.
While the Committee notes that the Tech Upgrade Plan
is about one year behind schedule, we also note with satisfaction the increase
in technology upgrade installations that occurred in the summer of 2002. This
increase was visibly signified by President Bruininks’ virtual ribbon cutting
of the 100th upgraded classroom at the beginning of the Fall 2002 semester, and is reflected in the steadily
improving access to vital classroom technology by faculty and students. This
increase in installations was accomplished with one-time funds under
partnership/leveraging initiatives between colleges/departments and Classroom
Management.
However, the Committee also notes that the recurring
funding to sustain these improved classrooms is lagging. Both faculty and
students are increasingly dependent on technology in classrooms. Having
adequate technology in classrooms is not optional for a top-tier institution.
It is essential for faculty and increasingly expected by matriculating
students. Faculty are increasingly investing great
time and energy incorporating multimedia, web and projection technologies in
their pedagogy. It will not be
acceptable to have the technology in classrooms fail in the future due to lack
of life cycle support.
While this discussion has focused on the Twin Cities,
the committee notes that each coordinate campus has pursued a similarly
important counterpart effort to address their own unique needs for classroom
technology initiatives.
The Senate Committee on Finance and Planning endorsed
the following resolution, which is presented for information.
"The Committee receives enthusiastically and
strongly re-endorses the recommendation for the general purpose classroom
technology upgrade and urges that it and corresponding efforts on the
coordinate campuses receive recurring funding and implementation at the
earliest possible date."
2. The Budget
Professor
Speaks next reported that the Provost's Budget Advisory Task Force had received
a detailed spreadsheet outlining the cuts, by administrative and academic unit,
that would be made as a result of the $25-million rescission that the Governor
has recommended. The numbers have been
sent to the deans. The cuts are
across-the-board. Professor Speaks said
he had expressed concern that the cuts did not reflect judgments about
institutional priorities but also that even across-the-board cuts can be done
in different ways--so that the method chosen for the across-the-board cuts
reflect some judgment or values. [Professor
Speaks later explained that one can establish in several ways the base budget
on which to calculate the cuts to each unit.
For example, the base could count only the state-appropriated funds, or
it could count those funds plus tuition, or it could count state-appropriate
funds, tuition, and ICR funds. The
distributional effects of the cuts vary considerably, depending on which funds
are included.]
Professor
Speaks distributed to Committee members copies of a table he had prepared
showing the base budgets used to calculate the cuts for each unit
(state-appropriated funds (O&M and state specials) and tuition), the
distribution of the $25-million cut by unit (proportional to each unit's share
of the total base budget), the cuts that would have been made if there were no
($8.3 million) subsidy to athletics, and the difference between the two
cuts--the latter illustrating the "cost" for each unit of the subsidy
to athletics. The differences between
the cuts with and without the athletic subsidy are as follows:
|
BOR |
$6.0 |
|
President |
$24.7 |
|
General
Counsel |
$31.0 |
|
Audits |
$13.9 |
|
Budget
and Finance |
$39.9 |
|
Controller |
$58.2 |
|
VP
University Services |
$9.9 |
|
Campus
Health & Safety |
$85.9 |
|
Auxiliary
Services |
$5.4 |
|
Facilities
Management |
$567.0 |
|
Human
Resources |
$75.8 |
|
Institutional
Relations |
$65.2 |
|
Campus
Life |
$92.3 |
|
Chief
of Staff/VP |
$8.6 |
|
Athletics |
|
|
Research |
$200.6 |
|
EVPP |
$266.3 |
|
Information
Technology |
$346.9 |
|
University
Libraries |
$206.4 |
|
CEHD |
$253.3 |
|
CSOM |
$303.8 |
|
Humphrey |
$33.4 |
|
Law |
$119.9 |
|
Arch.
& Landscape Arch. |
$59.7 |
|
Ag
Experiment Station |
$375.5 |
|
Human
Ecology |
$81.6 |
|
Natural
Resources |
$42.4 |
|
Ag., Food & Env. Sciences |
$107.2 |
|
MN
Extension Service |
$221.8 |
|
College
of Continuing Ed |
$126.5 |
|
CBS |
$159.0 |
|
CLA |
$942.5 |
|
GC |
$80.8 |
|
IT |
$746.4 |
|
|
$64.9 |
|
Dentistry |
$137.0 |
|
SVP AHC |
$38.7 |
|
AHC
Shared |
$219.9 |
|
|
$434.9 |
|
Nursing |
$52.4 |
|
Pharmacy |
$88.2 |
|
Public
Health |
$76.1 |
|
Vet
Med. |
$153.3 |
|
|
$750.3 |
|
Morris |
$195.8 |
|
Crookston |
$114.4 |
|
|
$11.3 |
|
|
|
|
TOTAL |
$8,095.0 |
What
would be the impact on the athletic department budget if the entire $8.3
million subsidy were eliminated, Professor Cudeck asked? The budget for the department is about $48
million, Mr. Klein reported, after looking it up in the Twin Cities Athletics
Financial Plan report to the Regents.
Mr. Klein added that as a result of the memo from Professor Speaks to
the Committee, he had reviewed the plan from intercollegiate athletics on how
it would approach its budget problems; he said he believed the University
should try to eliminate the subsidy. He
commented that he also found it interesting the University Plan, Performance
and Accountability Report from 2001 contained no references to athletics on the
Twin Cities campus, although the athletic programs on the other campuses are
mentioned in the Report. Athletics is
impliedly part of the campus and traditionally has been part of the fabric of
the undergraduate experience. But there
are no metrics on athletics as part of that report--it is as if athletics are
outside the discussion of University priorities and put in a bunker outside the
rest of the campus. People in athletics
might well believe they are in a separate bunker. This seems to be an odd omission from the
Plan, he concluded.
Professor
Speaks said that he may be seen in some quarters as athletics-bashing, but he
is not; he likes athletics. Inasmuch as
the University will have retrenched nearly $50 million during the current
biennium, and could face cuts of between $250 and $400 million in state funding
the next biennium, ANY subsidy has to be on the table. Before then-Vice President Brown brought her
report on funding of athletics to the Committee in 2001, there had been a
belief that athletics was self-supporting.
Vice President Brown's report demonstrated that it was not and it laid
out the projections. Without inferring
causation, he said, if one looks at a graph of the subsidy for the last ten
years, there was a gentle slope upwards until the time that President Yudof
arrived, after which time the slope increased sharply upwards. The subsidy began because there was a state
special appropriation for women's athletics which was subsequently folded into
the University's general appropriation in the mid-1990s. In the view of former women's athletic
director Chris Voelz, there was an implied intent that institutional support
for women's athletics would continue; in the view of President Yudof and Vice
President Brown, the amount was folded in to the University's appropriation but
there was no intent included. This
Committee, and the Faculty Consultative Committee, has twice adopted statements
urging that the subsidy be reduced (but did not call for it to be reduced to
zero).
Professor
Speaks recalled that President Yudof had proposed to eliminate three sports as
one way to reduce the subsidy. At the
last minute, it was learned that there were policies in place governing how
sports are to be cut. The eventual
outcome of the events was that the Board of Regents voted to continue the
subsidy for at least two more years.
It
may be a hollow gesture to call for the elimination of the subsidy, Professor
Speaks said, but the Committee must continue to remind the administration every
time it looks at the amounts of the cuts to the units, the numbers will be huge
in the next biennium. Another way to
look at the athletic subsidy, Professor Campbell observed, is that it amounts
to 2.5% of tuition.
Professor
Speaks, responding to Professor Cudeck's original question about what would
happen to athletics if the subsidy were eliminated, said he did not know. Athletic Director Joel Maturi has said he
wants the subsidy reduced but his plans are not known to the Committee. He probably could not cut $8 million but he
perhaps could make budget reductions to shrink the subsidy. Professor Speaks noted that two of the major revenue-producing
sports in men's athletics (basketball and hockey) already produce the maximum
revenue that can be expected; even if football were to sell out every game, it
would generate only an additional $3 million.
So the only way to deal with the subsidy is to cut expenses or increase
fund-raising.
Professor
Jahn wondered what proportion of the expenses of new
buildings were borne by intercollegiate athletics. Those costs cannot be escaped and are
probably very large because of the amount of construction that has taken
place. He also noted that he and
Professor Bauer serve on a steering committee charged with identifying ways to
assess the performance of support services; the first question on a survey that
has been distributed is "whom do you serve?" The response from intercollegiate athletics
was student-athletes and the public. The
response was not "the University."
Professor Campbell recalled that he only half-jokingly suggested that
perhaps there should be a check-off on state tax returns for the Gophers and
something similar on student fees; in the case of the latter, the contributions
could be used to provide discounted tickets.
With
respect to the next round of cuts, Professor Speaks reported, Dr. Maziar has
assured him that they will not be across-the-board, unlike the $25-million
rescission. He said he did not know what
the strategies would be but they would probably include cost-cutting (e.g., an
electronic directory and class schedule, reductions in benefits, and so on). Even with cost reductions, however, he said
he did not know how the University could escape targeted reductions if the cuts
are not to be across-the-board.
Mr.
Pfutzenreuter reported that the Governor's budget recommendations for the next
biennium will be released on February 11.
Professor Speaks inquired how the current-year rescission might be
affected if the legislature cannot reach agreement on a budget plan and the
Governor is forced to unallot. Mr.
Pfutzenreuter said he could only speculate but said that unallotment could
increase the rescission to $40 million because the Governor would not be able
to reach some funds in unallotment that could be dealt with in a budget
decision by the legislature. It is almost
irrelevant whether the number is $25 million or $40 million, he said, because
there will be cuts, whether now or later.
If the cuts are deeper now, they may offset cuts in the future.
Professor
Roe asked if the administration is doing what planning it can, after which it
will see the Governor's budget and then decide on recommended tuition
increases, and so on? Once they see the
numbers and the size of the cut, Mr. Pfutzenreuter said, then it will have to
be seen where the administration and the Board of Regents stand on tuition;
they will try to fashion an increase to offset part of the cut. There are "must dos" such as
utilities, bonds, the cost of opening new buildings, promises made, and so on,
which total about $80 million in increases for the biennium.
Mr.
Pfutzenreuter affirmed that there may be some discussion of these issues at the
Regents' meeting on February 13-14, since it will occur two days after the
Governor's recommendation. He said,
however, that there will likely not be discussion of any specifics. Professor Speaks noted that every 1% increase
in tuition generates about $3.5 million; even if tuition were to be increased
20%, the increase in revenue would total $70 million, which would be unlikely
to come close to covering the likely reduction in state funding.
Ms. McCarthy Barnes expressed concern
about what she saw as growing political support for a "high tuition, high
aid" approach to higher education funding in an effort to fund students
and not institutions. She said that
faculty, staff, and students should be concerned that tuition revenue
to the University could exceed the amount of state support, especially at a
land-grant university. And if there is
high tuition and low state support, Mr. Pfutzenreuter added, one must ask if
cuts can come in instruction. If tuition
is supporting the University, it may not be feasible to cut instruction. So should research and service be cut? There is also the question of
accountability. If students are funding more of the University
through tuition (i.e., support services, such as advising, housing), to
whom will the University become more accountable--the state? the students? Ms.
McCarthy Barnes asked? She concluded
that there is increasing support for the University becoming more like the
Is
there support for the Brandl idea, Professor Speaks asked? Mr. Pfutzenreuter gave the Committee a primer
on economic issues. There will be three
issues commingled at the legislature with respect to higher education. First, the Higher Education
Services Office (HESO), which provides student financial aid from the state,
requested $60 million for financial aid and a 1.1% increase in the four-year
tuition cap. That increase would
drive some additional funds to the private colleges, but not much. If the public institutions raise tuition,
they would in turn capture more of the money (because the financial aid
packages are tuition-driven). Second,
there has been a proposal from John Brandl and others that more money should be
taken from the base appropriations to the University and to MNSCU and put into
increased financial aid (beyond the $60 million that HESO has requested) and
that the caps on aid be increased significantly. This will mean more state financial aid money
will flow to the private colleges and universities; the proposal takes more
from the University, after which the legislature might then tell the University
to increase tuition to recover the money.
That
proposal polarizes access to higher education, Ms. McCarthy Barnes interjected,
and it is not in the interest of the land-grant institution. It is a reaction from the private colleges to
the increased quality of education at the University, she asserted.
The
third higher education item at the legislature is simply that the legislature
must balance the budget, Mr. Pfutzenreuter continued. The University could be reduced to support
HESO because the state wants to move to a "high tuition, high aid"
approach to funding higher education. He
said the University will not know what the approach is until the numbers become
public.
Several
of his colleagues have pointed out that many research grants include funds to
support graduate assistants, Professor Campbell reported. Raising tuition increases the amount that
must be paid, and the fringe benefits, so erodes the ability to support as many
students or it reduces the amount of work that can be done. This second-order effect from large tuition
increases is very serious. It has also
been a long-standing goal of the private colleges to reverse the traditional
funding formula in public higher education (1/3 paid by the students, 2/3 paid
by the state) so that the students pay the 2/3 and the state only 1/3.
Some
faculty may want the University to look more like the
Professor
Speaks now welcomed Executive Vice President and Provost Maziar to the
meeting. He noted that he has not
brought materials from the Budget Advisory Task Force (BATF) to the Committee
unless Dr. Maziar released them; he will bring them as soon as he can to the
Committee. Dr. Maziar told Professor
Speaks he should query her each time materials are distributed,
because she wants the confidentiality of the BATF discussions respected in order
its members can be frank.
Professor
Campbell noted that there have been budget advisory committees/budget advisory
task forces in the past. This one is
different because it has two very good faculty while
the others had five. The current committee
cannot get the breadth it needs from only two faculty members.
As
the budget moves forward, Dr. Maziar responded, they will need representation
from students in an advisory capacity as well, because as the picture becomes
clearer and the impact on students becomes known, it will be important that
they be at the table. Right now there
are so many unknowns about the biennial budget that she worries taking an early
position on issues could affect the proposals coming from the Capitol. This is a remarkably difficult environment,
she said, because what people do at the University could have an impact on how
issues are framed at the legislature. It
is likely that there will be no final decisions in
The
Governor's targets will be known next week, Professor Speaks observed. While she does not know what it will say, Dr.
Maziar said, whatever it contains will provide enough insight for the
University to begin work; past practice suggests the University's budget will
be within 5% of the Governor's recommendation, plus or minus.
Professor
Speaks said that everyone must do what they can to influence legislators about
the biennial request. Some office in the
University, however, needs to provide faculty and staff with talking
points. There are offices providing such
information, it was noted.
In
terms of representation on the BATF, Professor Speaks said, the President
appoints the group. Professor Campbell's
point seems reasonable; anyone who wishes to comment on the matter should drop
a note to President Bruininks.
Dr.
Maziar next distributed several items. First, copies of two articles about student financial aid, one by
the President of the Minnesota Private College Council, David Laird, and the
other by former University President Kenneth Keller. There is a strong movement in the state to
change the philosophy of funding higher education, to move from funding
institutions to funding students so they have money to attend the institution
of their choice--to establish, in effect, a higher education voucher
system. The arguments on both sides of
the issue are laid out well in the two articles, she said.
The
University sees danger in a changed state posture on funding higher education,
funding it through a "high tuition, high aid" approach, because it is
not clear there would be adequate funding for graduate and professional
education, the University's research mission, or the outreach/extension
mission.
Dr.
Maziar then reviewed briefly what some of the University's peer public
institutions are doing on budget issues.
Some have received mid-year cuts this year, ranging from $3.23 million
at
The
University had other options with the $23.7 million rescission last year, Dr.
Maziar commented, because the cut came before the new fiscal year. The University could raise tuition, defer
investments, and so on. When the
rescission hits in the middle of the budget year, the administration judged it
unreasonable to raise tuition mid-year, concluded it was too late to defer
investments (although units have been asked to do so where they can), concluded
it would not be possible to capture many savings from efficiencies when they
came so late in the year, so concluded that balances must be considered.
Dr.
Maziar turned to a two-page spreadsheet showing the state funds, state
specials, tuition, ICR allocations, and various totals and cuts that would be
made depending on which "base" one wanted to use. She noted that when tuition revenue is
included in the base used to calculate the cut for the $25-million rescission,
certain units' proportion of the base increases (i.e., the units that generate
tuition). By contrast, when tuition is
included, other units' proportion of the base decreases (e.g., the libraries);
for the most part, support/administrative units do not generate tuition income
so that including tuition in the base total decreases those units' proportion
of the base--and thus the cut they must sustain.
If
ICR funds were included in the base, some administrative units' share of the
base would increase slightly, but there would be significant shifts in the
impact on the colleges (e.g., the
They
then looked at balances growing in certain parts of the University, Dr. Maziar
related. Some of those balances were
accumulated at the direction of the central administration. They nonetheless concluded that for THIS
rescission, the amounts that would cause the least disruption in the functioning of the University
would be to use as the base budgets the amount that included the state
allocation, state special allocations, and tuition, but not ICR funds.
If
this approach is adopted, because of growing balances, Professor Speaks said,
it is saying that units should use non-recurring funds (the balances) to bridge
cuts that are recurring. Dr. Maziar
pointed out that the University had to find $25 million in five months and that
it expects another set of significant recurring cuts from the state. The administration does not expect this model
to be the one used in making the biennial cuts.
Professor Speaks noted that General College Dean Taylor was quoted in a
DAILY article as saying he would use reserves to handle the cuts; if the deans
are using non-recurring funds, are they being asked how they would bridge to
permanent cuts? They are, Dr. Maziar
said; the cuts must be made recurring in 12-18 months. She said the great regret is that this is
only the first shoe; the next one will be a Doc Marten.
Professor
Campbell noted that President Bruininks had sent out a message about the budget
and said the University would protect its core activities. Does the administration believe this mixture
of cuts protects the core elements of the mission? With respect to the current rescission she
believes it is, Dr. Maziar said; it would not be the optimal mixture in making
the decisions about the biennial budget cuts.
As they have talked through the options at the BATF and with the
President, they have the sense that the upcoming biennial cuts are a big
problem in which all must participate.
She said they are concerned that if the central administration
differentiates in cuts for this rescission, they would fight so many battles
they would not be able to extract the money needed this year and would open up
the University to more restrictions and micromanagement from outside.
Professor Speaks noted that the BATF
was also not unanimous in recommending the particular set of cuts that was
adopted. Dr. Maziar agreed and said the
sense of the discussion had been conveyed to the President. The strategy would have been different if
this had been a budget cut of $25-50 million, rather than a mid-year
rescission. Professor Speaks said it was
his sense that one might concede that under the pressure of five months, an
across-the-board strategy had to be used.
But the University needs to get to the point where it can follow the
original Rosenstone task force recommendation:
once the University establishes what it values and what it must protect,
then whether it receives a big or small financial hit, with a lot or a little
notice, it can act. Dr. Maziar commented
that the Rosenstone task force was not contemplating the level of cuts that are
coming; this could be an historic moment for the University. She said she was concerned about the legacy
this generation is leaving for the future.
If balances played a role in the
decision, Professor Korth said, did they consider adding a column to the
spreadsheet explicitly noting them? Dr.
Maziar explained why they did not and added that the decision to include
tuition prevented more units from being thrown into deficits. Professor Speaks noted that the spreadsheet
tuition data were for PROJECTED income, as set by the unit for the year; to the
extent a unit brings in more tuition than projected, it will have a
cushion. Mr. Pfutzenreuter affirmed that
that was the case and said that many units ARE generating more tuition than
projected (although, he pointed out, some of that money have been SPENT to
generate the additional income).
Professor Speaks asked that the Committee be provided the actual tuition
revenues.
Dr. Maziar then turned to the draft
biennial budget priorities. She
distributed a one-page draft summary.
The primary objective is to "protect the
The point of the second objective, she
said, is that the University should not just "hunker down": as it reallocates and reinvests, there is
still the opportunity to prepare the University to be a player in this
century. The ones that do so will be the
ones in ten years that are rising in the rankings.
Dr. Maziar then reviewed the
bullets. The first, "continue to
support/invest in key areas in which the University commands a leadership
position or has reasonable, near-term (within the decade) promise of doing
so," means the University will not let its top programs fade. (The first six bullets carry with them the
footnote "the budget climate may be sufficiently harsh that 'continue to
support' is interpreted as taking smaller than average cuts.") It would cost more to rebuild them and
letting them decline would mean losing a sense inside the institution that they
are a model for excellence. As she talks
to her Big Ten counterparts, Dr. Maziar related, the most consistent pattern is
of formulaic cuts--as the University has done with the $25-million
rescission--but differential reallocation.
The administration could differentiate on the cuts as well but that
would lead to significant difficulties.
The second bullet provides that the
University will "continue to support/invest in programs at the core that
support multiple other programs within the University--although such programs
may not have attained the distinction of national leadership, other University
programs depend on their vitality and health."
The third bullet provides that the
University will "continue to support/invest in campuses and programs that
serve students cost efficiently and serve them well."
The fourth bullet provides that the
University will "continue to support/invest in programs that provide
significant leverage of state dollars by attracting external resources--the
multiplier effect for such programs operates in both directions!" What this means, Dr. Maziar explained, is
that just as state funds attract external funds, to pull state funds out can
mean losing external funds as well, so reducing such funds would mean a greater
reduction in University funding.
The fifth bullet says that the
University will "continue to support the U's physical, information
technology and business systems infrastructure that serve the University's core
mission cost efficiently and effectively."
Dr. Maziar said that if the University believes what it is going through
is "re-basing" of the state's budget and the state's support, the
change will not go away in the next biennium.
That means the University cannot defer maintenance of vital
infrastructure systems such as information technology, buildings, and core
business systems for students, researchers, etc., or it will be caught in a spiral
of decay.
The sixth bullet says the University
will "continue to support programs that provide education/training/service
that is both unique and necessary for the state's welfare." The University will continue to do things
that if it did not do them would harm the state, Dr. Maziar said. There could be things the University does
that are unique but that do not affect the state, she observed. And there appears to be the noble sentiment
that as state agencies are cut, the University should step in. If that happens, she warned, the University
will have the obligation forever and will get no support for it. If something is a state responsibility, the
state must pay for it.
The remaining five bullets are these:
-- "Eliminate/reduce
institutional subsidy for programs and services not at the University's
core."
-- "Eliminate/reduce
programs not of sufficient quality or impact to merit institutional
support."
-- "Reassign or reduce resources
where capacity is underutilized (research space, departmental classrooms, support personnel)."
This means get more bang for the buck, Dr. Maziar said. This is a long-term strategy (it will only be
possible to save money on research space if the space is used better, which
means avoiding or delaying construction of new space or the use of rental
space.
-- "Reduce unit cost--especially in
areas where U is outside the norms for its peer group." Vice President Muscoplat is heading an effort
to accomplish this.
-- "Eliminate duplication and
redundancy of programs and services--locate function closest to core
competency." The University has
built enterprises around the campus that duplicate activities elsewhere.
These
principles will NOT solve a $250-million problem but they are a start, Dr.
Maziar said; they will ensure the University is getting as much effectiveness
as it can from its resources.
Professor
Speaks agreed that these principles will not fully address the necessary budget
cuts. In terms of the last five bullets,
how much will happen at the central level and how much will be expected of the
deans, he asked? Dr. Maziar said she
talks about the granularity of the kinds of cuts that are needed. If one is talking about a cut of $150,000 to
$200,000, it is not appropriate that such a decision be made at the central
level (and a lot of such cuts will be seen with the $25-million
rescission). The Provost does not have
the expertise to look at units and decide where $200,000 should be cut. If the biennial cuts are several times larger
than $25 million, however, the granularity will be sufficiently large that a
decision must be made centrally, with all the needed interaction with faculty,
staff, students, and the Board of Regents.
These would not be granular cuts, they would be big boulders, she
observed.
Is the
decision-making machinery in place to make these kinds of decisions, Professor
Roe inquired? Mr. Pfutzenreuter said one
must look at this as a two-year budget problem:
What can be done in the next 12 months and what can be done in the
longer term. The administration is not
equipped to evaluate every program in every college in the next months, so it
will be a two-year effort and there will be more targeted cuts in the second
year (depending, Mr. Pfutzenreuter noted, on how the cuts come and if bridge
funds exist). But the central
administration is not equipped to make surgical cuts. Dr. Maziar added that there is great concern
that as soon as something is identified as a low priority and targeted for
reductions, there will be a rider in the legislature preventing the cut. The result is that lower priorities are
protected. (Professor Speaks noted that
as the President talked about cutting three sports, he was unable to do so
because of procedural problems.)
Professor
Speaks asked, apropos Professor Roe's question, if the President has the
authority to eliminate colleges and departments. What would the mechanisms be to make cuts of
this magnitude? If the legislature could
intervene, who would make the cuts and who would participate? Boulder-like cuts would be made at the
central level, Dr. Maziar said, would be targeted, and would require a lot of
consultation with the University community and with the Board of Regents--and
would need the full support of the Board of Regents. Even then there would be the potential of
external interests making it difficult to make the cuts.
In
financial terms, would it be to the University's advantage to front-load the
cuts as much as possible in the first year, Professor Speaks asked? That depends on the size of the cuts, Dr.
Maziar said. If they are modest, the
University would prefer to try to take them all in the first year and avoid a
second year of cuts; the University could then begin to grow with its new base. It is important to get past the point of the
base reallocation. If the cuts are
extraordinarily large, however, to take all of the cuts in the first year could
be crippling and it would be difficult to start to grow again the second year.
This
situation will also be affected by how the economy fares in the next two years,
Professor Cudeck pointed out. The
University could hunker down for two years, but if the situation will remain
the same for five years, that is a different situation. Dr. Maziar said she believed that this
dislocation has brought the University back to different days, days it would
have been on without the dot.com bubble.
Language will be important, Professor Cudeck said; talk should not be
about the end of a certain time and a different University but instead about an
extraordinary period and that the University will not die.
The
University must be in a position to grow after the budget is
"re-based," Dr. Maziar said.
The situation is a little worse in
Ms.
McCarthy Barnes asked if, with respect to external reactions to eliminations or
reductions, the administration is prepared to talk with people about the issues
and programs that they care about before final decisions are made. Mr. Pfutzenreuter observed that the dispute
over ethanol is not about ethanol, it is about urban-rural differences, it is
about geography. He speculated that that
may be the issue at the Capitol more and more, and it crosses party lines. Dr. Maziar said she hoped the University can
work through a process to identify institutional priorities, identify where it
must take unfortunate cuts, where it must put resources to keep the University
strong, and then look at where it might have difficulty making the decisions
stick.
There
was discussion in the House, about the $25-million rescission, that the
Agricultural Experiment Stations should be exempt from cuts, Professor Speaks
said. That would make a difference of
$1.4 million in the cuts--an additional amount that would have to be absorbed
by other units.
Dr.
Maziar commented that in one way the University is fortunate because it is
dealing with these budget problems at a time when the executive officers trust
each other and they trust the faculty leadership and the students. This would be unimagineably difficult if these
conditions were absent.
Professor
Campbell asked about the letter from President Bruininks: To put on the table that some of the cuts may
be taken through reductions in employee benefits will touch everyone and will
anger many employees. It will not help
collegiality or solidarity with the administration. Dr. Maziar responded that the President was
trying to be honest with people about what is under serious consideration. Benefits costs are one the costs that is
expanding most rapidly. The discussion
today has been about budget cuts, not about other budget challenges the
University will face in 2004 and 2005.
There are unavoidable cost increases in debt, benefits, operating costs,
buildings, insurance, and so on. When
the administration looks at the costs it can control, benefits are one; they
are being open about the possibility.
Professor
Speaks said the Committee would appreciate another meeting with Dr. Maziar as
soon as the deliberations about budget cuts have advanced further. He adjourned the meeting at
--
Gary Engstrand