These minutes reflect
discussion and debate at a meeting of a committee of the
Minutes
Senate Committee on Finance and Planning
Tuesday, April 26, 2005
2:30 – 4:15
238A Morrill Hall
Present:
Charles Campbell (chair), Rose Blixt, David Chapman, Daniel
Feeney, Steve Fitzgerald, Lincoln Kallsen, Michael Korth, Kathleen O'Brien, Richard
Pfutzenreuter, Terry Roe, Charles Speaks, Alfred Sullivan, Susan Van Voorhis,
Absent:
Calvin Alexander, Kendal Beer, Arthur Erdman, Thomas
Klein, Joseph Konstan, Ian McMillan, Diane Parker, Thomas Stinson, Kate
VandenBosch, Michael Volna, Warren Warwick
Guests:
Professor Fred Morrison (incoming chair); Brian
Swanson (Office of Budget and Finance); J. Peter Zetterberg (Institutional
Research and Reporting); Senior Vice President for Academic Affairs and Provost
E. Thomas Sullivan; Jon Steadland (Office of the Board of Regents)
[In these minutes: (1) 2005 capital request and 2006 capital
budget; (2) strategic planning savings; (3) stadium update; (4) database on
departments; (5) salary instructions]
1. 2005 Capital Request/2006 Capital
Budget
Professor
Campbell convened the meeting at 2:30 and welcomed Vice President Pfutzenreuter
and Mr. Swanson to provide the Committee an update on the capital request.
Mr.
Pfutzenreuter distributed copies of a table outlining the University's request
and the final appropriation. In essence,
all of the University's projects were funded, along with a couple that were not
requested (but which the University supported), but the HEAPR (Higher Education
Asset Preservation and Renovation) funds were only funded at $40 million (the
University had requested $90 million).
With that reduction in the HEAPR funding, do they know what will not get
done, Professor Speaks inquired? Mr.
Pfutzenreuter said he is meeting with Vice President O'Brien to identify
projects that will be advanced and those that will have to be delayed.
Mr.
Swanson next reviewed the 2006 capital budget, which is the list of projects
that will be implemented during 2005-06.
To be on the list, the predesign (and schematics, preferably) must be
done and all the funding must be in hand or there must be an arrangement with
Vice President Pfutzenreuter to obtain the money. The list also contained a number of
"potential additions" to the capital budget, projects that have not
quite met the requirements but that may very well do so in the near
future. This lets the Regents know that
there will likely be capital budget amendments as the year progresses.
Professor
Campbell noted that the table showing the funding sources for each project do
not show the 1/6th required from the unit; is that contribution
required for all but HEAPR projects?
That is the policy, Mr. Pfutzenreuter said, and they are trying to
enforce it, but some deans do not like it.
The amount identified as the University's contribution to the cost of a
project will be part debt and part cash.
Two items, he noted, did not carry the usual 1/3 matching requirement
from the state: agriculture water
management projects and the University-Mayo partnership. The requirement of the 1/6 contribution from
the unit (one-half of the University's one-third) is policy but is only in
place for these projects; there is some balking about the requirement.
Professor
Campbell said he was sympathetic to the argument that units have paid the IRS
tax for a number of years so project costs were covered by everyone, but now
the game has changed and those who were helped in the past need not help other
units as much. Mr. Pfutzenreuter agreed
there is some validity to that argument; they adopted the policy to prompt
units to put some funding into projects from their balances, and units were
given a number of years advance notice of the requirement, but there are still
problems with the policy. Are some units
required to pay the full 1/3, Professor Campbell asked? When there is a target of opportunity, the
University does not turn it down, Mr. Pfutzenreuter said.
How
often is the capital budget updated during the year and what is the likelihood
of new entries, Professor Roe asked? Mr.
Swanson said the capital budget goes to the Regents in May and June and, once
approved, is done until the following year.
But projects do pop up during the year; they are brought to the Regents'
Facilities committee for action (although the Board does not like capital
budget amendments). If, for example,
there is damage from weather, or a large research grant provides facilities
upgrades, those are acceptable changes, Vice President O'Brien added.
Professor
Speaks asked if Mr. Pfutzenreuter had any idea why the legislature cut $50
million from the HEAPR funding request but then gave the University $27 million
in projects it did not ask for (including nearly $22 million for the Mayo
partnership and nearly $5 million for a plant pathology research
facility). The University asked for the
Mayo partnership funding, Mr. Pfutzenreuter said, and the plant pathology
facility is related to a potential disaster for soybeans that is coming from
the south. The Mayo project was not
traded off against other University projects, he said, and was originally
considered an economic development project.
The legislature typically cuts the HEAPR funding request; otherwise the
University largely received what it requested.
Last time the University requested $80 million in HEAPR funding and
received $35 million; this year it requested $90 million and received $40
million, Mr. Swanson reported. It
appears, Mr. Pfutzenreuter observed, that the legislature is in the pattern of
approving about half of what the University requests. As hard as the University works for HEAPR
funding, he said, no one is excited about tarring roofs and the like; there are
no advocates for this kind of work, even though the legislature knows it is
necessary to fund it.
How
many projects on the list began as entries on the six-year capital plan in the
sixth year, Professor Campbell inquired.
A number that were funded this year were not; some had been in previous
six-year plans. What they have found,
Vice President O'Brien said, is that a project may be in the six-year plan for
more than six years before it is finally funded.
Are
the HEAPR projects itemized, Ms. Blixt asked?
The University provides the legislature a list, Mr. Pfutzenreuter
said. There is a six-year HEAPR plan,
Vice President O'Brien said, which they are now reviewing and updating. They will determine if there are any urgent
projects because of facilities conditions.
Mr. Swanson said that as the University seeks and receives increased
HEAPR funding, they refine the process of allocating it and use the Facilities
Condition Assessment database to help determine which project receives HEAPR
funding. He noted that the University
has tried to argue that projects such as the Kolthoff renovation and the
Nicholson should be treated as HEAPR projects, since every element of the work
qualifies as HEAPR, but when all of the elements are combined into one big
project, the legislature refuses to treat it as eligible for HEAPR funding.
Professor
Campbell thanked Messrs. Pfutzenreuter and Swanson for their report.
2. Strategic Planning Savings
Professor
Campbell reported that he had provided to Mr. Pfutzenreuter an excerpt from an
email from a faculty member who indicated that the central administration has a
spreadsheet indicating savings will accrue as a result of the changes proposed
in the strategic planning process—and where those savings would be
allocated. Mr. Pfutzenreuter said that
to his knowledge, no such list exists.
3. Stadium Update
Mr.
Pfutzenreuter reported that even with all the publicity about the Twins
stadium, legislative leaders appear to be saying that the University will get
its stadium first. University leaders
have met with the appropriate committees and they expect the project to move
along.
Vice
President O'Brien described the environmental review process, an essential
component of the decision whether to move ahead. Any sporting facilities that seats more than
20,000 people must have an Environmental Impact Statement (EIS), so the
University has begun that process. It
was not clear, under the EIS statute, who the Responsible Government Unit is;
the University sought and received the designation for the purpose of the
stadium. They have briefed the Regents
on their role as the Responsible Government Unit and have hired consultants to
draft the EIS. They have also hired a
traffic engineer to help design roads, work with the proposed central (light
rail) corridor, the North Star rail line.
They are reviewing proposals to remediate the soil and expect to make a
selection soon. All consultants are
retained using an open, competitive process.
They hope to have the EIS done by next year in order to stay on
schedule. It is, Mr. Pfutzenreuter
observed, about 1200 days to the proposed kick-off date for the first game.
If
the legislature provides $94 million and the University does fund-raising for
the rest (not all of which will be available cash), what will be the magnitude
of the debt required, Professor Speaks asked?
Until the fund-raising for corporate sponsorships is completed, Mr.
Pfutzenreuter said, he could not tell how much would be long-term and how much
would be short-term debt. Whatever the
magnitude of the debt, will the University deal with one financial institution
or spread the financing around, Professor Speaks asked? The University has put out a request for
proposals, Mr. Pfutzenreuter said, and will see what it gets.
Professor
Speaks asked if the President will consider labeling the student contribution a
stadium fee and not fold it into the University Fee (thus avoiding making it
part of charges to departments and research grants for fringe benefit costs for
graduate assistants). Mr. Pfutzenreuter
noted that the President had been quoted in the newspaper as clearly saying
that stadium costs would not take money from academic programs. That includes funding for graduate
students. So students would be exempt if
they are being supported by a department or research grant but not if they were
paying their own costs, Professor Campbell asked? That is not correct, Mr. Pfutzenreuter said;
there will be a charge to the students themselves. The President has been clear about that. The question about whom the fee will apply to
is still being discussed. His financing
model assumes $50 per semester that starts with freshmen and sophomores in
2006, freshmen, sophomores, and juniors in 2007, and all students (except
non-degree-seeking students) in 2008.
This is a plan that has not been approved by anyone, he cautioned, but
it proposes to phase in the fee by class and ties the benefit of the stadium to
those who will be on campus when it opens.
In
the financial analysis, students are to receive admission to some athletic
events in return for the stadium fee, Professor Campbell recalled. They are negotiating with the students on the
timing and extent of the fee and what students receive in return, Mr.
Pfutzenreuter reported. The admission to
events could be broadened to include the arts, but they do not have any idea of
what the cost of doing so would be.
Professor
Speaks said he did not believe a statement from the Committee was necessary,
given what Vice President Pfutzenreuter said; he simply wanted to be sure that
the fee would not be structured in such a way that departments and research
grants would be paying it. He also urged
that the fee be explicitly labeled a stadium fee; students now will know they
are paying it but in a few years students will not know. It is necessary that the process be
transparent.
4. Database on Departments
Professor
Campbell welcomed Dr. Peter Zetterberg to the meeting to join a discussion
about the development of a departmental database, an idea first suggested by
Professor Roe that Professor Campbell had outlined earlier in a letter to
Provost Sullivan. The pertinent part of
the letter follows:
We
would be interested in thinking aloud with you about the development of a
database or information system that could help to evaluate the opportunity
costs of putting resources in one college versus another, or within a college,
in one department versus another.
Professor Terry Roe provided, at my request, much of the following
narrative, but it reflects an interest expressed by a number of Committee
members and which I endorse.
Your
"strategic planning initiative has, as part of its purpose, to identify at
the college and department levels strategic directions and the maintenance and
possible enhancement of fundamental strengths.
Colleges have been asked to respond accordingly. A new budget model is under consideration,
one of which seeks to address more carefully "full cost"
accountability. Inevitably, this process
has financial implications that entail the allocation of resources, including
faculty tenure lines, across the entire university. While the current initiative is contributing
to a one-time information/data base, a question arises as to whether such a
data base should be created on a more on-going basis that can help to provide a
guide to the long-term productivity of resources in one college relative to
another.
Some
questions are:
Is
it useful and/or feasible to establish a database process to help assess the
opportunity costs of resources across colleges?
Where
in the administrative structure of the University should the responsibility for
such a data base lie?
What
should be the key characteristics of such a database?
Should
the data base be quantitative or qualitative, or both?
Would
a “spread-sheet” at the unit level of the following nature be useful, or too
onerous?
Examples:
1.
Output/quality
indicators
a.
The rank of a
department among similar departments at peer universities
b.
The number of
faculty retention cases
c.
Proportion of
total graduate applicants choosing peer institutions
d.
Numbers of
undergraduate and graduate enrolment and graduation rates
e.
Placement of
graduate students (peer institutions, other)
f.
Starting
salaries/compensation to graduates
g.
Publication to
faculty ratio
h.
Grants,
contracts, national awards
i.
Some quantitative
measure of the quality/uniqueness of research facilities
2.
Institutional
“linkage” indicators
a.
Proportion of
“non-majors” in total enrolment
b.
Proportion of
FTEs in cross-departmental (within college) and cross-departmental – cross
college activities (teaching, research, outreach)
c.
Other
quantitative indicators of “public good” provision
3.
Resource use
(input/cost) indicators
a.
Key variable
costs
i.
Faculty salary
costs, by rank
ii.
Salary cost of
support and other personnel
iii.
Salary costs of
Research Associates
iv.
Variable research
costs not associated with salaries (equipment depreciation, energy, chemical,
biological objects, etc)
b.
Key fixed costs
i.
Facilities
(space: could use depreciation costs)
ii.
Equipment in
place (capitalized value)
iii.
Other
c.
Intermediate
input use
i.
(e.g., library and
other “public goods”), with costs prorated as a proportion of library costs.
These
data could be used to create an institutional “financial” or cost-benefit sheet
for each department.
Professor Roe explained that he developed this idea some
time ago and the point is to develop a mechanism to collect and assess
information about the productivity of resources assigned to the various
colleges. There was a time that the
Dr. Zetterberg began by suggesting the Committee might
want a report on how the data business at the University works. There are three core systems: financial, student, and human resources. They are dynamic; the data change daily and
reports are extracted from the data.
Institutional Research and Reporting has reports on the web, and
programs could be written in any way that was desired to produce additional
reports.
There
are also "ugly" data, information that is not in the databases, such
as statistics on grant proposals, award funds, retention cases, and so on. Peer rankings for departments are not
available. The rankings are known by the
departments, Professor Roe said. They
are, Dr. Zetterberg agreed, but those are not objective national
standards. The National Research Council
1993 statistics are now obsolete. But
one could go to a dean and identify which the best and worst departments in a
field are, and could get rankings based on competition for faculty and graduate
students or on publications. Departments
have a sense of rankings but there are no objective numbers.
With
respect to the core data, however, those already exist and a new database is
not needed. What is needed is a report
that tells the Committee or the Provost what they want to know. Institutional Research and Reporting is
probably the best office to provide such a report on an annual basis if there
is an interest in tracking data over time.
In
2001 they worked with Senior Vice President Cerra and Vice President Maziar to
try to put together comparative data at the department level for the entire
University. It was virtually impossible
because of different business practices in the different colleges (e.g., how faculty
are appointed in colleges), and at any given time there are about 20,000
students who do not have a major. Much
of what one would regard as common data are problematic, such as the number of
majors and number of degrees. Analyzing
anything at the department level is problematic; it can be done, but the
information is not very satisfying. Some
of the information the Committee is interested in can be pulled from the three
core systems, and it could be supplemented with a shadow database (e.g., the department
head's opinion of the top departments in the field). It would be a lot of work but it could be
kept and updated. Some information,
however, could not be obtained (e.g., where a peer institution places its Ph.D.
students or the second choice of students—there is a lot of non-routine data
that cannot be obtained).
Is
the same true at both the graduate and undergraduate levels, Professor Roe
asked? Things are messier at the
graduate level, Dr. Zetterberg said. For
example, faculty can be spread across 2-3-4 departments and it is nearly
impossible to credit effort to specific programs. The question is how to improve the current
system, Professor Roe said. If the University
is going to change its budget model, and rely more on outputs, it should not
rely on impressions—and if it does, there will be more negotiation that will
not be based on fact. The University has
a lot of data, Dr. Zetterberg said, although it may not reflect all the
nuances, and even if they could produce the report, who could read and
comprehend it? Someone must make
decisions about colleges and departments, Professor Roe maintained; even if the
data are subjective, time-series data would help.
Dr.
Zetterberg said his advice for the Committee is to understand what is already
available and to see if it could identify perhaps ten data items it believed
important. Professor Roe said he was not
interested in doing these things; the question is whether the University can
improve its database in the new environment in order to improve decisions, or
if it is stuck with what it has. Dr.
Zetterberg said he believed the current database was adequate, but it might not
be, and if not, one should concentrate on a few key things to be measured. This question arose with discussion of public
goods, Professor Roe said; some units use more of them than others and the
consumption should be transparent.
Professor
Campbell suggested that there be a discussion in a smaller group and the issue
brought back to the Committee. There are
good questions to be asked and the Committee has a lot to learn. As the University moves into the new budget
model, faculty concerns will grow, and they need to understand what can and
cannot be done. He said he would ask for
volunteers to join the discussion and then bring the matter back to the
Committee. He thanked Dr. Zetterberg for
joining the meeting.
5. Salary Instructions
Professor
Campbell welcomed Provost Sullivan to the meeting and informed him that the
Committee would like to have a discussion of the salary instructions each
year. What is the present situation, he
asked?
The
budget instructions went out in March, Provost Sullivan said; to his knowledge,
they did not come to this Committee first and it learned about them after the
fact. He also learned, after the fact,
that it was routine practice to bring them to the Committee for review, and he
did not know why the practice was not followed this year. He said he would be glad to bring the
instructions to the Committee in the future, as in the past.
The
substance in the document is this: Deans
have the discretion to create a salary pool that exceeds 3% for merit and
market adjustments, since he hears that salaries are the top priority given
where the University is vis-à-vis its peers and aspirational schools. The deans are also required to report on the
consultative process they used with the faculty—his office does not dictate a
process—so he can see what happens across the institution.
At
the last meeting of the Committee questions came up about the 2005-06 academic
salary memo that is on the web, Professor Campbell reported. He invited Committee members to pose
them. Professor Morrison inquired if the
biennial request item for salaries was included in the instructions or over and
above the amounts in the memo. Those
funds are for "target of opportunity" hires and retention cases,
Provost Sullivan said, and not part of the pool for regular salary
distribution. It is a separate
pool.
Professor Campbell noted that salaries have a high
priority in the biennial request. Is it
fair to assume that if the Legislature does not meet the University's request,
the salary pool would not be reduced? Provost Sullivan said he assumed that would
be the case; he has said that faculty salaries should be the highest priority
of the University, although it may not be able to do much about them this
biennium. He has tried to encourage the
deans to create a salary pool greater than 3% because he has heard that salaries
are a critical issue. It is easier for
some colleges than others to create a larger salary pool, Professor Campbell
observed; some could deliver substantial raises while others cannot. Will he address that disparity at the central
level? He would, Provost Sullivan said,
and agreed that some colleges are more able or willing to increase
salaries. The question must be resolved
in the colleges, given the model of decentralized responsibility; after that,
he can identify where there are insufficient funds and a problem that must be
addressed. There is a lot of catching up
to do in salaries and they must be brought to the top priority.
For
awhile there were increases provided to faculty that were not bonuses and not
tied to a tenure line, the X-Y-Z formula.
It started in the
Is
the capacity of a college to provide retention funds closely related to the
financial condition of the college, Professor Roe asked? To what extent is a college constrained by a
central constraint? In the first
instance, the college is responsible for managing, Provost Sullivan said; if
unable to do so, presumably the central administration would be asked to
help. In his experience, the
administration comes in on an ad hoc basis, not systematically. The principle is that the college manages
increases; if not, they bring a request to his office. This is one area where the University could
use new legislative funds, which it has not had at the central level for many
years. Retention offers must be approved
by the Senior Vice President and President, Professor Campbell observed, whether
or not they include central funding.
Another
question the Committee wished clarified is whether the $1500 for promotion is
on top of the 3% or included as part of it, Professor Campbell said. The wording of the salary memo is not clear
on the point. The language has been in
the memos for a long time, Mr. Kallsen said, and so have the dollar
amounts. In his view, the amounts guard
against salary freezes and set a minimum for promotion; they have not, however,
looked at for spreadsheets that include the regular raises and a second column
for promotional increases. As a dean,
Provost Sullivan recalled, he took the instructions to mean that the 3% should
be different from and above the promotional increase. That is the way it has worked in practice,
Mr. Kallsen said, although they have never required a spreadsheet showing the
two amounts. Some units interpret the
promotional amounts as a base, Ms. Blixt said:
they must give $1500 and may give more as resources allow. The numbers have been the same for a long
time, Mr. Kallsen observed; Professor Morrison said they were established in
1979 or 1980. Provost Sullivan said that
suggests the amounts should be revisited.
Professor
Campbell said that with respect to the future and the priority of salaries, and
the University's aspiration to be among the top three, there was a time once
when the University had a goal to achieve movement in salary rankings. Could it return to that goal? There is no such goal at present, the Provost
agreed. Since he has been at the
University, the goal was to be at the median of the CIC. The University has used a couple of metrics,
Mr. Kallsen said, such as middle of the top 30; it has bounced between 23rd
and 28th. Professor Morrison
said there have been several targets:
middle of the top 30; when that became unrealistic, it was the middle of
the publics in the top 30 (which is the second 15 of the top 30); when that became
unrealistic, the University stopped talking about targets.
Professor
Campbell said that a colleague of his obtained data after an earlier Committee
discussion; among full professors, the University ranks 83rd in the
country. The University ranks behind
such institutions as
Rankings
can be misleading, Professor Roe said, because they do not take into account
the cost of living or the composition of the faculty. Mr. Kallsen said that the University always
looks better in rankings when they are based on total compensation. Professor Roe said he would like to have a
more consistent way to measure salary rankings on a long-term basis.
It
was agreed that the Committee should recommend to the Provost an appropriate
salary objective.
Professor
Campbell adjourned the meeting at 4:15.
--
Gary Engstrand