These minutes reflect
discussion and debate at a meeting of a committee of the
Minutes
Senate Committee on Finance and Planning
Tuesday, September 20, 2005
2:30 – 4:15
238A Morrill Hall
Present:
Fred Morrison (chair), Rose Blixt, Charles Campbell, Arthur
Erdman, Daniel Feeney, Steve Fitzgerald, Lincoln Kallsen, Thomas Klein, Judith
Martin, Ian McMillan, Kathleen O'Brien, Kathryn Olson, Richard Pfutzenreuter, Karen
Seashore, Alfred Sullivan, Kate VandenBosch, Susan Van Voorhis
Absent:
Calvin Alexander, Kendal Beer, Joseph Konstan, Michael
Korth, Justin Revenaugh, Charles Speaks, Thomas Stinson, Michael Volna, Warren
Warwick
Guests:
none
Other:
Meredith Fox (Office of Service and Continuous
Improvement)
[In these minutes: (1) financing strategies for
realizing the mission; (2) optimizing use of classrooms; (3) administrative strategic
positioning task forces; (4) subcommittee on twin cities facilities and support
services]
1. Financing Strategies for Realizing the
Professor
Morrison convened the meeting at 2:35 and turned to Vice President
Pfutzenreuter to begin a discussion of financing the mission.
Mr.
Pfutzenreuter explained that the President has scheduled a series of workshops
with the Board of Regents on financing the mission of the University. One workshop was held in September (the
information from which will be presented at the Committee today), and there
will be additional sessions in October, November, December, and next
spring. He turned to Mr. Kallsen to walk
through the handout distributed to Committee members.
Mr.
Kallsen began by noting there are several policy questions the President is
asking the Regents to focus on.
"What are the primary historic and projected trends in University
revenues? What revenue growth is needed
to meet essential costs and new strategic investments? What areas of revenue should be realistically
increased to meet our goals? What policy
changes are needed to create this revenue growth to sustain and invest in the
University?" The long-range
financial model was brought to this Committee last year, he recalled, and one
point was that with increasing costs (even without considering growth), the
University needs more funding than what the state has been willing to
provide. The presentation to the Board
in September was intended to set up future presentations about potential
sources for increased revenues.
Mr. Kallsen then reviewed the
University's revenue budget for FY2006 (a total of about $2.6 billion):
26% state
support (was 33% about 6 years ago)
22 tuition
and fees
22 sponsored
research
20 other restricted and unrestricted
revenues (a wide range of activities, some of which will be the focus of future
discussion about long-term financing)
10 auxiliaries (which set rates to cover
costs and which will not be a focus in the discussion of long-term financing
questions)
Of
the state funds ($614 million in FY 2006, 26% of the University's revenue),
about 14% is in state specials, the spending of which is restricted by state
statute. The University thus has
somewhat over $500 million in flexible spending. It is the President's view that (1) "the
University will continue to require a long-term, enduring partnership with the
state to be successful" and (2) "new and enhanced revenue streams
must supplement, not supplant state support." The latter is a worry, because as the
University might find ways to generate new revenue, those at the Capitol might
see that as justification for diverting state funds from the University to
address other state problems.
Professor
Martin inquired if the percentage of funds in the state specials has held
steady. Mr. Pfutzenreuter said that the
number of state specials has been collapsed into a small group, and the
University has consciously not asked for increases in the specials in recent
years.
Tuition
and fees, 22% of the University's revenue, are projected at $523 million for FY
2006. Revenue from this source has
increased 55% in the last five years due both to volume and rate
increases. Ten years ago tuition revenue
equaled about one-half the state appropriation; now is nearly equals the state
funding. Mr. Kallsen observed that the
University is unlikely to be able to sustain that rate of growth in tuition
revenue, even though the University remains a good value and applications and
enrollments have continued to grow. In
response to a query from Professor Campbell, Mr. Kallsen said that tuition paid
by O&M funds or by sponsored projects is not counted twice.
From
1994 to 2004 undergraduate headcount enrollment increased 19.9%; graduate and
professional student enrollment increased by 31.2%. Those increases accounted for about 25% of
the increased tuition revenue over the last ten years. But the University cannot sustain that level
of growth, Mr. Kallsen pointed out; if it were to do so on the Twin Cities
campus for example, there would be 13,000 more students. Professor Seashore suggested that increases
in graduate student enrollment might not generate the additional revenue one
would expect because many students are supported; Mr. Kallsen said that only
about one-third of graduate students are on some kind of assistantship.
The
trend line in the traditional college-age population is heading down, Mr.
Kallsen said. The 18-24-year-old cohort
is predicted to increase by about 4.5% in
Sponsored
research, 22% of the University's revenue, was estimated to be $510 million in
FY 2005; that number includes the indirect cost funds. Sponsored research is increasingly
competitive due to static or declining rates of federal investment. The number of NIH and NSF grants is down,
which is a cause for worry because over half of the sponsored research income
comes from those two agencies.
One implication of these trends is, as the President has maintained,
"the University will continue to require a long-term, enduring partnership
with the state." Tuition revenue is not likely to increase in the
future at the same rate it has in the last five to ten years and sponsored
research will remain extremely competitive. Another implication of those
trends is that the University will need to focus on entrepreneurial activity to
generate additional capital for investment. The administration will put
an initial focus on three areas: intellectual property commercialization,
better use of University assets, and private giving.
(1) With respect to commercialization of
intellectual property, "gross income derived from tech transfer at US
universities has more than tripled from $300 million to $1 billion from 1995
through 2003." The University
earned about $48 million in 2005, but 90% of that income was from Ziagen, the
anti-AIDS drug. The University's
intellectual property pipeline, however, was ranked fourth-best in the country
according to The Scientist.
Commercialization of intellectual property, however, is not just a
source of revenue; it also leads to an improved quality of life, "business
development and economic growth, supports the University's mission of research
and innovation," and is "needed to nurture the creativity of talented
faculty and staff." Optimizing the
revenue from intellectual property will require a new approach; Mr. Kallsen
outlined a few of the elements of such an approach. He suggested that the Committee talk with
Vice President Mulcahy about this subject in greater depth.
(2) With respect to University assets, the
question is whether they are being used to their fullest value and in support
of strategic goals. There are three
assets that will be considered: land,
investments, and buildings. How should
the University use the land it owns, only about one-seventh of which is needed
for its campuses, to support the mission?
Can the University optimize investment strategies? Can it increase efficiency in the use of 811
buildings and over 28 million square feet?
(3) With respect to private giving, revenue has
increased about 9% per year over the last decade—the highest growth rate in all
the University's revenue streams. Among
public institutions, the University's $1.73 billion endowment in FY 2004 ranked
sixth in the country (U of Texas is $10.3 billion, U of California system is
$4.67 billion, Texas A&M is $4.37 billion, Michigan is $4.16 billion, and
Virginia is $2.79 billion). But the
University will need to rely increasingly on private giving, and the goal is to
achieve a higher level of "spendable gifts." There is also preliminary discussion of the
next capital campaign.
The
Regents' work sessions over the next several months will focus on (1) to
(3). The first will be led by Vice
President Mulcahy, the second by Vice President Muscoplat, and the third by Associate
Vice President Fischer.
Professor
Morrison thanked Mr. Kallsen for the presentation.
2. Optimizing Use of Classrooms
Professor
Morrison turned next to Executive Associate Vice President Sullivan to begin a
discussion of a report on space utilization and optimization.
Dr.
Sullivan said he would like the advice of the Committee on the report, copies
of the executive summary from which he distributed. He explained that the report came from the
President's Emerging Leaders team last year, a group that chose to focus on
utilization of classrooms, both central and departmental. The charge was to improve classroom
utilization and the group engaged in a number of activities to develop
recommendations. He received the report
in June and decided that rather than just implement it, he would first consult
about it because of the implications. He
has spoken with the Council of Undergraduate Deans and with the Twin Cities
deans; this Committee was the one other place he wished to bring the report for
review and comment.
The
first recommendation from the group is to "mandate use of Resource 25 by
all departments." (Resource 25 is
the central scheduling program for classrooms.)
Dr. Sullivan said that some say this is impossible and some believe departments
will lose control of their classrooms, which is not true; they still have the
right of first refusal; getting them on the system, however, lets the
University understand utilization rates.
Professor
Morrison pointed out that the very first paragraph under Recommendation 1
provided the reason why departments often hold classrooms out of the Resource
25 (computerized scheduling) program:
there is a 10-month lead time for scheduling fall semester courses. For fall, 2006, scheduling needs to be done
by November 2005. Mr. Fitzgerald agreed
that it was a long time but said that is because it is a complex matter across
the University. He noted that the lead
time is shorter than it was, and if the goal is to standardize business
practices, it could be shortened somewhat more, although not a great deal. That is why departments do not use the
system, Professor Morrison reiterated.
They have that lead time so that students can register early and so that
the class schedule can be set, Mr. Fitzgerald said, and so that the classroom
schedule can be integrated with other student services and systems. Professor Morrison said that in his case, the
Law faculty is small and because of the way the curriculum is structured they
may not know until May or June what courses will be taught, or at what
hours. They have several choices: stay out of the system, enter a lot of
courses in the system to block out the classrooms and then cancel them in June,
or change their academic program to accommodate the schedule timeline—in other
words, to compromise their academic program so the computers can work. He said he will resist that.
Mr.
Klein said this is an example of conflicting components of the decision-making
process, each with a valid point. Might
there be a committee to look at this?
And perhaps set a timeline to work toward perhaps a 90-day turnaround,
rather than 10 months? Dr. Sullivan said
they would like to move in that direction, although it may be outside what can
be accomplished. He suggested it would
be helpful to obtain data because right now units vary widely in their
practices in scheduling.
Ms.
Olson wondered if the Committee was not misinterpreting the
recommendation. It calls for mandating
use of Resource 25 by all departments; it does not require that all the
classrooms be subject to the control of central scheduling. Mr. Fitzgerald reiterated that the adoption
of the Resource 25 application does NOT alter the fact that the department
schedules, funds, manages, and other controls the departmental classroom. Resource 25 is simply a common,
enterprise-level software application that allows the campus to take advantage
of economies of scale in operations and management of classroom resources.
Dr.
Sullivan reviewed the other recommendations from the report: (2) continue enhancement of the Office of
Classroom Management reporting tools and data-collection practices; (3) create
awareness of utilization issues through an educational marketing campaign; (4)
enforce current policies related to utilization. Number (2) is a good idea, he commented,
because it can connect to the metrics-and-measurement strategic-planning task
force and help measure progress to the goal.
(3) is needed. (4) he also agreed
with; policies should be enforced; there must be a reason why the utilization
policies have not been enforced and those reasons need to be identified. His view is that classrooms should be put on
the system so there is better reporting, training provided so people can use
the system, and follow-up.
Mr.
Fitzgerald said that right now there is no common system for scheduling departmental
classrooms, no standards for quantifying and monitoring departmental classroom
use, and no training available for people who need to schedule them. There needs to be a common system with common
values; with Resource 25, departments can obtain the expertise of the
scheduling office in the Office of Classroom Management, the system is easy to
use and train on, and it improves the University's business practice. The idea is not to mandate central scheduling
but to standardize practices.
Professor
Seashore said there is a classroom utilization problem at the University and
there are problematic departmental practices.
But Resource 25 also offers advantages for units that schedule classes
later in the semester: it allows
searching the system for a classroom.
The system can enhance the ability to match classrooms to classes. Several Committee members described ways in
which the Resource 25 program had helped in scheduling and administering their
departmental classrooms. Mr. Fitzgerald
noted that, so far, 28 departments/programs in 11 colleges had voluntarily
adopted the Resource 25 program, covering 94 departmental classrooms.
Professor
Morrison related that the
Everything
has to be incentive-driven, Professor Feeney said; if it is just an
administrative idea it will not work.
With the new budget model, will there not be incentives to have
classrooms centrally-scheduled, he asked?
A department will have to pay for departmentally-controlled classrooms,
so might be willing to make them available for central scheduling if they do
not have to pay for them as a result. Is
that part of this set of recommendations?
There is a program like that already in place, Mr. Fitzgerald said: as part of the technology upgrade plan, a
department makes a classroom available for central scheduling; his office
installs a new technology package, the room can be centrally-scheduled, but the
department retains first access under "priority scheduling.". The question is how long the department can
retain priority, Professor Morrison said. The priority in central classrooms places the
designated department's courses in the designated room at the time of initial
assignment (i.e., before all others), Mr. Fitzgerald responded.
Professor
Martin reflected, after the discussion, that the document the Committee had
been looking at was WAY too complicated.
There are important points that none seem to disagree about but the
report causes angst because of the way it is written. Professor Erdman suggested putting the point
about policy enforcement as #1; if the University can't enforce its own
policies in this area, the Committee should go on to the next topic on the
agenda because this is not worth talking about.
The question of adherence to policy will come up a lot in the strategic
planning discussions, and if the University can't ensure its policies are
followed, there will be trouble. Dr.
Sullivan said this proposal was the canary in the coal mine. He agreed with Professor Erdman that if this
policy, relatively trivial but with tentacles, requires such extensive
consultation, the University runs the risk of looking like FEMA responding to
Hurricane Katrina.
Professor
Morrison suggested the proposal should put more emphasis on curriculum than on
physical facility use. And this will
have far-reaching implications under the new budget model, Ms. Blixt
repeated: departments will have to
decide whether they want to keep control of the classroom square footage, and
pay for it, of it they are willing to give up control and receive a classroom
subsidy.
Mr. Klein said there is a bigger problem
looming: when there is a lack of data,
decisions will be made using other criteria, and those other criteria will
trump the issues the Committee is discussing. Unless all parties can see the
facts on classroom utilization and policy, it will be very difficult to
implement a better classroom scheduling process that balances the issues of
local control and the efficiencies of centralization. If the University does
not have data and information that can be used to inform the discussion, each
group will hold to its own beliefs and there will not be consultation, which
will in turn jeopardize curricula and everyone’s interests. Professor Morrison agreed; the University is
constantly asked for data. It must have
this information.
Professor VandenBosch asked what the
outcome of this discussion would be. Dr.
Sullivan said it would be feedback. He
said he believed the recommendations should be implemented, even if better
explanations are needed. If the
University is serious about reform, it must make the best use of what it has
and make data-driven decisions.
Consultation will be important in order to identify issues that need to
be addressed.
Professor
Morrison summarized the discussion: the
report should be implemented, department classrooms should be part of the
central scheduling program but with control retained by the department, and
there should be an in-between option whereby a classroom is centrally-scheduled
but departments retain preference. He
suggested the recommendations be implemented one semester later than
recommended because it would likely not be possible to have them effective this
November. The November date was driven
by the 2006 fall semester schedule, Mr. Fitzgerald said, and they have
completed some of the training, but the decision is up to the University to
decide whether to adopt the recommendations.
After that one can wrestle with timing and how the program will work
best for departments. Professor Morrison
pointed out that even in November there will be people without training, which
means those departments will be way behind; he suggested the Committee
ENCOURAGE November, 2005, and require adopting by spring, 2006. Professor Martin also suggested that as the
recommendations are circulated and training offered, links to existing policies
should be made available as well.
Professor
Morrison thanked Dr. Sullivan for his report and Mr. Fitzgerald for his added
comments.
3. Administrative Strategic Positioning
Task Forces
Professor
Morrison turned next to Vice President O'Brien to discuss the administrative
strategic planning task forces.
Vice
President O'Brien distributed copies of the charge to prospective task force
chairs. She recalled President
Bruininks' inaugural statement that he wanted the University to be "known
as much for its service and business innovation as for its high quality
research, education, and public service."
The administrative recommendations will be important to the achievement
of the goal of being one of the top three public research universities in the
world. The commitment, she said, is to
build an administration to provide to faculty and staff the support they need
to do their jobs, so they can focus on building academic programs and not spend
their energy and creativity on administrative tasks. If they do the job right, Ms. O'Brien
commented, "You will not know we are here."
Vice
President O'Brien reviewed the seven recommendations that came out of the
administrative strategic planning task force; she considers them action items
and each will have a task force to identify ways to implement them. The process will take 2-5 years, she
said. The administrative task forces
need to be distinguished from the academic task forces because the goal and
strategies for the administrative task forces have already been established and
they are moving toward implementation, whereas the academic task forces are
still considering strategies. They are
perhaps one-half step ahead on the administrative side. The seven recommendations came from a task force
of 18 people, two of whom were members of this Committee (Professors Roe and
VandenBosch), Ms. O'Brien recalled.
Perhaps the most important step the task force took was a "blank
slate activity": what would one
want the administrative side of the University to look like if one were
starting anew?
Professor
Morrison will be a member of the steering committee, the group that will
oversee the activities of the seven task forces, Ms. O'Brien reported. The task forces have almost been constituted,
and all will have faculty on them. They
have tried to select people with experience and expertise and specific skill
sets as well as to achieve representation from across the University. Thanks to an invitation from Professor
Morrison, she will report to this Committee in November and January on the work
of the task forces.
Professor
Morrison asked Committee members to look, before the next meeting, at the total
of 49 bullets appearing under the seven task forces and identify any they
believe the Committee should express views about. Some it may not be interested in; others it
might have more interest in. Vice
President O'Brien pointed out that these bullets represent suggested projects;
the task forces will develop a revised portfolio of projects that are necessary
to achieve the recommendations. And they may generate more suggestions,
Professor Morrison added.
Professor
Morrison thanked Vice President O'Brien for her report.
4. Subcommittee on Twin Cities Facilities
and Support Services
Professor
Morrison now drew the attention of Committee members to a memo concerning the
Subcommittee on Twin Cities Facilities and Support Services (STCFSS): The Subcommittee is seeking guidance on what
its foci should be during 2005-06 and suggested topics.
Professor
Morrison suggested it should focus on the proposed football stadium (in
particular, storm water mitigation), the proposed Coffman Union light-rail
station, and the University's public art program master plan. Vice President O'Brien, however, wondered if
the last two should not be on the agenda for Professor Erdman's subcommittee,
on Capital Projects and Campus Master Planning.
The campus master planning effort will be launched soon and it should be
reviewed by Professor Erdman's subcommittee, she said.
Professor
Morrison agreed and said that Committee members should also suggest appropriate
topics for STCFSS. Vice President
O'Brien suggested that some of the strategic planning bullets could be
delegated to STCFSS and to the capital projects subcommittee. Professor Morrison concurred but with the
reservation that he did not want administrators to be required to consult with
multiple groups on the same topic.
With
respect to the Coffman Union light-rail station, Vice President O'Brien
reported that the Metropolitan Council is in the process of reviewing a draft
Environmental Impact Statement for the alternatives. One proposal envisions a tunnel for the light
rail on the East Bank (beginning at the point the light rail gets across the
river and emerging near University and Washington Avenues) and one envisions a
surface track; neither envisions a tunnel on the
Professor
Morrison adjourned the meeting at 4:30.
--
Gary Engstrand