These minutes reflect
discussion and debate at a meeting of a committee of the
Minutes
Senate Committee on Finance and Planning
Tuesday, September 6, 2005
2:30 – 4:15
510 Morrill Hall
Present:
Fred Morrison (chair), Rose Blixt, Arthur Erdman,
Daniel Feeney, Steve Fitzgerald, Lincoln Kallsen, Thomas Klein, Joseph Konstan,
Michael Korth, Judith Martin, Ian McMillan, Kathleen O'Brien, Kathryn Olson, Richard
Pfutzenreuter, Justin Revenaugh, Karen Seashore, Kate VandenBosch, Susan Van
Voorhis
Absent:
Calvin Alexander, Kendal Beer, Charles Campbell,
Charles Speaks, Thomas Stinson, Alfred Sullivan, Michael Volna, Warren Warwick
Guests:
none
[In these minutes: (1) faculty salary objective; (2) Regents'
Finance and Operations Committee work plan and items for this Committee; (3)
2006 capital request]
1. Faculty Salary Objective
Professor
Morrison convened the meeting at 2:30 and began by recalling that last year
Provost Sullivan asked the Committee to develop a faculty salary recommendation
that would be a part of the strategic positioning process goal of becoming one
of the top three public universities in the world.
Professor
Konstan said he would move, for the sake of discussion, that the Committee
recommend the faculty salary objective be the median of the top five public
universities in the
Professor
Morrison said there were also other questions involved. Is there a need for, or should, the salary
objective address median salaries or also competition with offers received from
other institutions? Professor Konstan
suggested that measure would not work because the University is competitive at
the new-hire level and way behind at the full-professor level. There is a need to address salaries before
other institutions can poach senior faculty from the University.
Professor
VandenBosch said there is also need to re-examine the increments awarded at
each promotion. The amounts are very
small at the University. [Established in
1993 and not changed since, promotion from assistant to associate professor
carries an increase of $1500; from associate to full carries $2000.] Professor Morrison agreed the promotion
increments are one piece of the issue.
Professor
Seashore asked if there is any statement of the objectives to be achieved with
a salary goal. It needs to be clear if
the goal is to ensure the University is able to retain faculty, both through
anticipation as well as through immediate responses to offers. People can look at
There
are two ways to go after the goal, Professor Konstan suggested. One is to combat the practice of not
rewarding high performers. The other, in
at least some areas, is to go after "stars" where the University does
not have them. These approaches have to
be used together, not just one or the other.
He said the University should not give "top 3" salaries to a
"top 10" faculty—that would not bring the University into the top
three. The argument that must be made is
that higher salaries appropriately delivered will, over time, prevent the
University from losing "top 3" faculty. But the University cannot simply give
everyone a 30% salary increase and then announce it has achieved the top
three. Professor Morrison agreed that
increases had to be targeted in addition to average salary increases. The University cannot have a system where the
"stars" are paid very well and everyone else is not.
Professor
Erdman said the University needs to search for a system whereby salary is not
the reason people leave. The University
may not be able to match all salary offers when faculty are recruited, but it
perhaps could match support.
The
University also has to complete against the average January temperature,
Professor Martin observed. Professor
Morrison agreed that weather is a factor and needs to be offset in recruiting
and retention. Professor Konstan added
that when most on the Committee were hired, the Twin Cities was an under-valued
real estate market. That is no longer
true. This was a low-cost metropolitan
area, but it is not any more.
There
also used to be the argument that the University's salaries were not as high as
others' but that the benefits made up for the gap, but that is also no longer
quite so true, either, Professor Martin pointed out. Professor Morrison said the benefits are
still a little better, but not a lot.
And they are not much better in health care, Mr. Pfutzenreuter
observed. Professor Morrison suggested,
however, that the Committee focus on compensation, not salaries, in order to
avoid the arguments about the value of the fringe benefits.
It
was agreed that materials provided to the Faculty Consultative Committee on
institutional rankings should also be provided to the Committee.
2. The Regents' Finance and Operations
Committee Workplan and Committee Agenda Items
Professor
Morrison turned to Mr. Pfutzenreuter to discuss the issues that will be coming
before the Regents' Finance and Operations Committee and which of them should
come before this Committee as well.
Mr.
Pfutzenreuter explained that the Finance and Operations Committee has two
different kinds of agenda items, policy issues and routine transactional items;
it is the former that will be of interest to the Committee. The Committee agreed it would have
discussions about a number of the items that will go to the Board:
-- The
background data/information provided at the four working sessions of the Board
committee
(financing the mission: broad trends in funding, commercializable
intellectual property; capital giving; and underperforming assets)
-- Issues
related to the annual Asset Management report
-- Financing
assumptions for the six-year capital plan and the 2006 capital request
-- Policy
on targeted business and related issues
-- Capital
financing and debt management guidelines
-- The
annual financial report
-- Annual
investment consultant's report (endowment benchmarks)
-- Review
of Alternative Asset Portfolio
-- Financial
comparisons with other higher education institutions
-- Enterprise
Financial System replacement
-- 2007
President's operating budget
-- 2007
President's recommended annual capital budget
-- (For
information, not discussion, financial oversight key indicators)
In
addition, Committee members suggested other issues they wished to see come on
the agenda:
-- University
-- The
new budget model (scheduled for October)
-- The salary memo, including distribution
of the separate merit pool, how promotional increases are factored into general
increases, and whether the salaries delivered matched the salaries promised
-- Tuition
rate-setting (and other changes, which affect graduate assistantships)
-- Support
for graduate education
-- Facilities planning, the Facilities
Condition Assessment, an update on capital projects management, and the annual
report on utilities
-- Administrative strategic planning
-- The food service and vending RFP (what
is the University looking for?)
-- The football stadium
-- Classrooms
-- The routine business, such as
rate-setting in parking
Professor
Morrison noted that the Regents will also be addressing their fiduciary
responsibility with respect to the Faculty Retirement Plan. He said this Committee should defer to the
advice of the Retirement Benefits Subcommittee concerning any impact on the
Subcommittee's jurisdiction; the discussions will be about financing and
choices, not the level of benefit.
3. 2006 Capital Request
Mr. Pfutzenreuter
distributed copies of the preliminary 2006 capital request. In addition to $80 million in HEAPR funding,
there are four items for the Twin Cities (bio-based products building
renovation—the former Wood & Paper Science building—Carlson School expansion,
student services/science teaching center—the Science Classroom Building at the
end of the Washington Avenue Bridge—and medical research building), two for
Duluth (business school and American Indian learning resource center), and
funds for regional centers and stations.
The total proposed request is $296 million, with $224 to come from the
state and $72 million from the University's 1/3 contribution to the non-HEAPR
projects. Not all of them are final, Mr.
Pfutzenreuter said. The state has about
$2 billion in requests; the debt capacity guidelines the state uses would
permit about $784 million in debt. It
will be a challenge to obtain support for the full request, he concluded. The legislature will meet next March to
approve capital appropriations.
Professor Morrison inquired what on the
list would arouse interest and support from the liberal arts faculty. Mr. Pfutzenreuter said that CLA faculty could
look at the projects they have received in recent years; in addition, this
request happens to contain more new buildings, while CLA tends to occupy older
buildings. Vice President O'Brien
pointed out that the Department of Economics will go into the new
Professor Martin inquired if the
University's contribution would come from fund-raising or bonds. Perhaps 25% from fund-raising, Mr.
Pfutzenreuter surmised.
Professor Konstan pointed out that
there will be a new budget model in place at the University, so presumably the
units will each be responsible for the entire 1/3 cost of new projects, not
just part of the 1/3. Has anyone reviewed
the list to determine, given the new budget model, these items are still the
University's priorities? Mr.
Pfutzenreuter said that discussions about each project have begun and they will
be treated as required in the new budget model.
The President will then decide whether he wishes to help a unit cover
the cost of its 1/3. Would the President
have different priorities under the existing budget model, Professor Konstan
asked? The President will view the
capital request as a strategic document and will not be driven by who can
pay. Professor Konstan pointed out that
a building may not be a high priority for the University but a unit may want it
and have the money; would the building go on the list? That has happened, Mr. Pfutzenreuter allowed.
Mr. Klein noted that the Committee has
heard on more than one occasion that the University would not build 28 million
square feet on the Twin Cities campus if it were starting from scratch. It would be helpful to know how these
projects fit with the long-term square footage goal for the University. Does
this facilities plan increase square footage, reduce it, improve it, increase
the assignable square feet, and so on?
Professor Martin recalled that at the FCC retreat, it was pointed out
that the
The list is not final, Mr.
Pfutzenreuter said. It may be too large
and the President may recommend a smaller list to the Regents.
The Committee discussed the size of the
HEAPR request. Is it an easy place for
the legislature to cut, Professor Konstan asked? Ms. O'Brien said one must look at the funds
over time. Increases are good, but this
still only represents about one-half of what the University needs. The University usually receives about
one-half of what it requests. The Facilities
Condition Assessment, an inspection-based assessment, will give people
confidence that the University should ask for $80 million. The problem for the legislature is that it is
hard to cut the ribbon on HEAPR projects.
Professor Morrison said that the University has been receiving about $40
million in recent biennia, and over four biennia that amounts to a significant
amount of funding. Each $40 million does
result in repairs. But if the University
does not ask for the money, it will not get it—so the University will have new
buildings and buildings that are falling apart.
Does the University bring legislators to the campuses to see that it can
spend $80 million, Professor Seashore asked?
(It does.) It is important to
educate them about the cost of maintaining the physical plant, she said.
Professor Morrison adjourned the
meeting at 3:55.
--
Gary Engstrand