These minutes reflect
discussion and debate at a meeting of a committee of the
Minutes
Senate Committee on Finance and Planning
Tuesday, December 19, 2006
2:00 – 4:15
238A Morrill Hall
Present:
Judith Martin (chair), Rose Blixt, Daniel Feeney, Steve
Fitzgerald, Marcie Jefferys, Lincoln Kallsen, Thomas Klein, Joseph Konstan, Michael
Korth, Kathleen O'Brien, Kathryn Olson, Richard Pfutzenreuter, Karen Seashore, Charles
Speaks, Thomas Stinson, Warren Warwick,
Absent:
Ian Macmillan, Mikael Moseley, Justin Revenaugh, Terry
Roe, Michael Volna, George Wilcox, Aks Zaheer, John Ziegenhagen
Guests:
Richard Howard (Director, Institutional Research);
Senior Vice President Frank Cerra, Vice President Tim Mulcahy, Professors
Philip Pardey and Paul Glewwe (ad hoc committee on the economic impacts of the
University); Professors Carol Chomsky and Scott Lanyon (Faculty Consultative
Committee)
[In these minutes: (1) strategic positioning key financial
indicators; (2) return on investment in the University (and comparisons with
other institutions in support); (3) resolution for Professor Speaks; (4) update
on East Gateway District and the football stadium]
1. Strategic Positioning Key Financial
Indicators
Professor
Martin convened the meeting at 2:00 and welcomed Dr. Howard back to the meeting
to continue the discussion of key financial indicators for strategic
positioning.
Dr.
Howard distributed copies of a handout and again reviewed the University-level
metrics that tentatively have been chosen.
Nine of them come from the Florida study of top public research
universities (National Academy members, faculty awards in the arts, humanities,
science, engineering, and health, post-doctoral appointments, total research
expenditures, federal research expenditures, student quality (ACT scores),
graduate degrees conferred, total endowment assets, and annual giving) and were
accepted last year as standards by which the institution would measure
itself. The authors of the
The
study ranks all institutions and breaks out publics and privates. If an institution is in the top 25 on all
nine measures, it is in the top tier.
Professor
Speaks recalled that at one time
Professor
Konstan commented that use of these measures means the University wants to be
McDonalds: biggest one wins. There is little in these measures about the
quality of outcomes. For three of the
four financial metrics, the question is "how much money do you
have?" It would be better to have
additional measures, such as dollars per student or per faculty, percentage of
alumni who donate, and so on. These data
are geared to getting bigger in order to move up the rankings. Dr. Howard agreed but said that those are the
metrics that have been chosen. Other
measures on the list (a total of 18) were chosen by the Metrics Steering
Committee as a starting point (faculty/staff diversity, faculty satisfaction,
student diversity, affordability, student outcomes, international involvement,
student satisfaction, citizen satisfaction, intellectual property
commercialization, student participation in public engagement activities,
financial strength (two elements of which are endowment assets and annual
giving), library quality, and facilities condition). Next year they will meet with people from
across the campuses to discuss the metrics that should be used to reflect both
quality and quantity. The University
will live with the nine measures from the
Professor
Konstan suggested that another measure should be percentage of faculty who are
tenured or tenure-track, which would receive a lot of faculty support and would
be an a priori measure of faculty strength.
Professor
Seashore asked how involved Dr. Howard's office would be if the University had
to respond to a question about the outcome quality of graduating students. Dr. Howard said those conversations are going
on in a number of places. He said he did
not know if one can measure what students have learned, but alumni surveys and
graduating student surveys can get at satisfaction—which is not quality.
Professor
Speaks said there is an inherent danger in using these measures. When Mark Yudof was president, Dr. Zetterberg
in Dr. Howard's office made a presentation to the Regents about the
Dr.
Howard next reviewed academic metrics and measures for 2006-07, a list of 30
items. They have ten years of data for
each of them, including by college, he said; they could look at efficiencies,
but they would not get a values. FTE
ratios and similar measures will be used more in compacts. Are there instructions to use these measures
in the compacts, Professor Martin asked?
There are, Dr. Howard said, and the data are on the web, by college. Each Twin Cities dean received a profile of
the Twin Cities colleges so he or she could compare.
Professor
Konstan noted (from tables included in the handout) that over a ten-year period
the number of faculty (tenured/tenure track plus those not) increased by about
500 but the total number of employees dropped by about 50. Is that good or bad? Does that mean less support for faculty? That is a discussion for the dean and
provost, Dr. Howard said.
Are
there other variables that should be used, Professor Howard inquired? Are these the right ratios to use? He asked Committee members to look over the
measures and let him know.
What
has come up at FCC meetings with department chairs, Professor Martin reported,
is that they have much less flexibility to promote an academic agenda for the
department than they did in the past.
Resources are now located in central administration or they are
restricted; one possible ratio might look at the amount of restricted funding
in units and a question posed about whether the percentage should be growing. The situation probably varies a lot across
departments, Dr. Howard said; they have not looked at departments, only
colleges. He said he did not know what
the ratio should be. Professor Martin
inquired if a value should be placed on deans and department chairs having
funds to promote academic initiatives.
Dr. Howard said it should within the context of strategic
positioning. There are measures for
endowment assets and annual giving, but those do not measure the underpinnings
of academic quality.
Vice
President Pfutzenreuter reminded the Committee to think about the audience for
institutional metrics: it is the people
who do rankings, the political arena, and perhaps some inside the
University. Other measures can get at
the concerns of Committee members without being part of institutional rankings. Professor Martin responded that there cannot
be a disjuncture between the institutional measures and the measures of quality
that are used in the compact process.
Professor Speaks said there is no end of things one can count and ratios
one can calculate. First there should be
questions to which the University wants answers and then one asks for the
data. These are data in search of a
question. If the deans are doing things
in order to increase or decrease the metric for their college, one has lost
sight of the institutional metrics and it becomes bean counting.
It is
important that people understand that the metrics being used are not ones that
must be used forever, Professor Martin said.
Dr. Howard responded that only the nine measures from the
Professor
Martin thanked Dr. Howard for joining the meeting.
2. Return on Investment in the University
Professor
Martin turned to Senior Vice President Cerra to lead a discussion of
preliminary reports on the return on investment in the University.
Dr.
Cerra explained that about a year ago the President asked him to establish a
group to look at economic aspects of the University. He set up an ad hoc group that worked on the
issues; they worked with the Department of Applied Economics. They looked first at two things (more will
come later): one, what can one say about
research support at the University over a long period of time, and two, what is
the public value of higher education at the
Professor
Pardey began by reporting that the ad hoc committee reviewed hundreds of
studies of the economics of higher education and concluded that they would do
more than a crude input-output study. They
were surprised by the results; their study (Professor Pardey had two
graduate-student co-authors) is entitled "Long Gone
The
report attempted to put the University on the same footing as its peers and
evaluate how it looks vis-à-vis its competitors. Several measures they looked at got their
attention. In terms of the University's
rankings on academic research and development investments in 1972 and 2004, it
had slipped considerably. The rankings
were as follows (1972, 2004):
Total academic R&D: 19, 26
Academic R&D per capital: 20, 40
Academic R&D per dollar of gross state
product: 20, 43
Professor Pardey emphasized that the study is not just
about R&D funding trends in Minnesota or at this university, but that it
also explores in some detail what "competitors" in other states and
other (peer) institutions are doing, and how Minnesota measures up in
comparison.
They
also looked at the total operating expenditures of the University from 1945 to
2004. The budget in that period went
from $151 million to about $2.2 billion in real dollars; student enrollment
went from about 11,400 to about 65,500.
State and local funds as a share of the University's budget shrank from
about 5.7% to about 3.6%. There has been
(since 1972) a gradual decline in University expenditures as a percentage of
gross state product.
Another
graph depicted, for the period 1972-2004, the range and average of total
academic R&D expenditures for 10 institutions used in the report of the
Metrics and Measurement Task Force plus an additional three institutions Vice
President Mulcahy suggested be included (all 13 are public institutions). For
the period 1972 to 1991
Professor
Seashore noted that the spread between the top and bottom schools had increased
significantly starting in 2001; what happened?
Vice President Mulcahy said the institutions are asking the same
question; UCAL, for example, went from #9 to #1. Is this a consequence of targeted investments
in one or two areas that resulted in a big payoff, Professor Seashore
asked? Dr. Cerra suggested it may have
been. Dr. Mulcahy said that if one
examines the data closely for each school, one finds a difference in the
categories of revenue. What has happened
at
Professor
Pardey said that in 1972 Minnesota was 4th in the group, crept up in
the 1990s to 2nd, thereafter stalled and slowed, and is now 9th
in the group of 13. There were big shifts
in the positions the institutions held during these 25 years, he said, and one
must look at the data over a long period.
At the same time these changes were occurring, Dr. Cerra said, the NIH
budget doubled. Professor Konstan asked
if the picture is more rosy because some schools dropped out. The players at the top since the 1980s have
been constant, Dr. Mulcahy said, but there have been dramatic changes in the
lower half of the range; a number have dropped out while other institutions
have appeared. The numbers for the
institutions in the lower half will be above those for
Professor
Pardey next reviewed a table showing the sources of funding for academic
R&D for the 13 institutions in the study (federal, state/local, industry,
institutionally-financed, and other).
Professor Konstan observed that the University was 4th in
state/local funding in both 1972 and 2004 but that it had slipped in all other
categories.
Professor
Pardey then reviewed two graphs illustrating the average annual growth rate by
funding source and
The
message, Professor Pardey said, is that there has been a structural shift in
funding for research if one looks at the temporal relationships among the
funding sources. They also looked for
lag results—one source generating additional funds from another—and could find
no relationship.
Vice
President Mulcahy said they looked at the funding from the state and from
industry to see what has happened since 1980.
Is the decline due to something the University is doing, to make it less
competitive? That could be, but there
has also been a major change in the state philosophy; the DNR and other
departments used to outsource their research but now they do it in-house.
Professor
Seashore observed, apropos the source of funding for research from industry,
that while all universities saw the same trend down,
Professor
Pardey next reviewed a graph of academic R&D spending from 1990-2004 with
four lines. One plotted actual
expenditures (the lowest line); the other three plotted where
This
is about being bigger, not better, Professor Konstan said. Are the schools growing the size of their
faculty? Growing overall? Or is it a matter of productivity/investment
mix? A number of the institutions are
growing faster than the University, Dr. Cerra said (e.g., in terms of NIH
support), and the University is being raided by institutions that are making
big investments. Professor Konstan said
that the University could run up its expenditures but would risk crashing on
the wave; he said he was more concerned that the University sustain growth
rather than get to the top fast. These
data are about total size, he repeated, and not about whether faculty here are
doing worse than faculty at other institutions.
Professor Pardey did not agree.
In the full report forthcoming, he said, they also report academic
R&D funding normalized by faculty and student counts and on a per capita and
per gross state product basis; the
The
question is how to frame these results in the context of the biennial request
and strategic positioning, Dr. Cerra said.
The data are consistent with what Vice President Mulcahy has reported
earlier and with what the bio-business community has presented about
investments in the biosciences in the last 15 years. If the University is to do something in
response to these data, it will have to make some tough decisions about
investments. There has been a lot of
discussion in this Committee and in the Faculty Consultative Committee about
how to frame the argument to the state, Professor Konstan said, and these data
reflect a state that is stepping back from research funding. The question is
how to make this an issue, because the state expects a return on its
investment. A bigger problem is federal
and institutional funding, Professor Pardey said; a lot of institutions have
done well because of institutional support.
The University must "own" the problem, Dr. Cerra agreed, and
must ask what it is doing about it.
Professor
Glewwe next reported on "Valuing the Public Benefits of the Education
Provided by Public Universities: A Study
of the
-- Enrollment has increased by 33% in the
last ten years (273,000 to 364,000)
-- Enrollment
at the
-- Enrollment
increases have occurred at MNSCU (150,000 to 170,000) and at private career
schools
-- The
University's "market share" is declining, especially for graduate
degrees; in 1966 the University granted about 73% of graduate degrees in the
state; in 2005, it was about 32%. The
University's share of undergraduate degrees declined in the same period from
about 38% to 30%
-- The
biggest new competitors for graduate degrees are St. Mary's University, the
One
can ask how good the graduate degrees are from some of those places, Professor
Glewwe observed. Professor Hendel
commented that another major source of graduate degrees is
Professor
Glewwe next reviewed trends in tuition and fees and in government funding. Tuition and fees have increased dramatically
in the last 35 years; in the 1980s the increases were highest at the private
colleges while in the 2000s the increases were greatest at the University. In 1970-71, University tuition was 31% of that
at
Compared
with surrounding states as well as
The
University's budget for 2006 was about $2.5 billion. Of that, 21.3% came from tuition and fees,
10.8% from gifts and endowment earnings, 21.4% from sponsored grants and
contracts, 25% from state appropriations, and 21.4% from other sources. The state appropriation for the last three
years for the University (for MNSCU) has been (rounded to the nearest million):
2004-05:
550,000,000 (546,000,000)
2005-06:
591,000,000 (601,000,000)
2006-07:
620,000,000 (602,000,000)
Professor
Glewwe then reviewed the benefits of public support to university education
from an economic perspective. The
private benefits are a higher income and a variety of non-income benefits. The income benefits from higher education
have been studied for decades; on average in the
There
are several public benefits of higher education. A public benefit is any "caused by
education that accrue to ANY members of society IN ADDITION TO THE PRIVATE
BENEFITS ENJOYED BY INDIVIDUALS WHO OBTAIN THAT EDUCATION. The key point is that one individual benefits
from another's education and the other person is not compensated for it (any
compensation would be a private benefit)."
Professor Glewwe offered a related observation: "If all benefits from higher education
were private, there would be no argument on economic grounds for subsidizing
education. The only arguments would be
ones based on income redistribution (and higher education is a blunt method for
redistributing income) or on paternalism."
But if public benefits from higher education exist, there are economic
efficiency grounds for subsidizing it.
The
main public benefits of higher education are:
(income:) diffusion of valuable skills from social interactions off the
job between highly-educated and less-educated people—the wage spillover;
(non-income:) increased civic
participation, reduced crime, learning and pleasant interaction from social
interactions. One question to be asked
is this: "why should a person in
Professor
Glewwe next reviewed the estimated impact on the distribution of degrees in
Professor
Glewwe then provided a table with tentative numbers estimating the value of
total public benefits from the University.
If the University raised its tuition to $15,000 per year, the wage
spillover effect would be about $963 million; if it raised tuition to $25,000
per year, the wage spillover effect would be about $1.78 billion (that is,
those amounts would be lost to the economy because fewer people had
degrees). (This assumes that people
unable to afford the cost of attending the University of Minnesota would not
then attend some other institution of higher education in the state—e.g.,
MNSCU—which is probably not unreasonable because MNSCU schools are already at
or near capacity.) The total public and
private benefits to the population who did not attend the University would be
about $802 million (if tuition were $15,000) and $1.48 billion (if tuition were
raised to $25,000). Those amounts
include the wage spillovers, additional income and sales tax payments, and
other factors. Professor Glewwe
emphasized that the specific numbers are probably shaky but that they are very
reasonable guesstimates of the public benefits.
Asked
to what use the two papers would be put, Senior Vice President Cerra said they
are University work products (which will be published) and will be used
internally.
Professor
Martin thanked Professors Glewwe and Pardey and Drs. Cerra and Mulcahy for
joining the meeting.
3. Resolution for Professor Speaks
Professor
Martin next read a resolution:
Whereas, Charles E. Speaks
("Chuck I," as opposed to Charles Campbell, "Chuck II") has
the record for the longest service ever recorded on the Senate Committee on
Finance and Planning, and
Whereas during three of those
fourteen and one-half years said Professor Speaks served as chair of the
committee with charm, grace, and good humor, and
Whereas during those fourteen
and one-half years said Professor Speaks was also one of the most active,
questioning, and inquisitive members of the committee, and
Whereas during those fourteen
and one-half years said Professor Speaks ably and admirably fulfilled his role
of representing the faculty by duly and regularly pestering the administration
about most matters before the committee, and
Whereas the said Professor
Speaks has, to the annoyance of the committee and his colleagues, has chosen to
retire from the University and thus escape eligibility for further service on
the committee, and
Whereas his colleagues will
miss his presence and his voice since he has made this heartless and wicked
decision to leave,
Therefore Be It Resolved that
the Committee wishes Professor Speaks the very best in his retirement and hopes
with envy that he enjoys himself in Florida this year and there or in other
warm places in future years while the rest of his former colleagues labor away
at matters financial in the cold of Minnesota, and
Be It Further Resolved that
the Committee requests the Committee on Committees to add a new ex officio seat
on the Committee, an emeritus faculty member, the first occupant of which can
be Charles E. Speaks.
The Committee gave Professor Speaks a round of applause.
4. East
Gateway District and Football Stadium Update
Professor Martin turned next to her colleague Vice
President O'Brien to lead a discussion about the stadium and the "East
Gateway District," as it is now called.
Vice President O'Brien distributed copies of slides and
began by reporting that Regents' approval of the stadium schematic design is
needed to move forward to design development and construction documents for the
stadium. Much has changed since the
original plans for the area were developed (the projected biomedical facilities,
light-rail transit), however, and the site, district, and stadium project are
more than building a new football stadium.
The University is building a new part of campus for growing and high-priority
academic programs. The University is
proceeding as planned on a complex set of projects; they are on schedule with
the projects. Since the original 2003
feasibility study, however, they have learned more about the site and
infrastructure requirements—as well as how the campus will develop in the future. The information, from a variety of sources (Environmental
Impact Study, engineering studies, campus and neighborhood consultation,
strategic positioning) has changed the thinking about the context for the
stadium. For one thing, the medical
sciences corridor in the same area is becoming a reality.
Vice President O'Brien noted a map of the East Gateway
District as it now exists; the rough boundaries have Williams and Mariucci
Arena on the west,
The district, however, is more than just a stadium; it
includes the Medical Bioscience Facility and future biomedical research
buildings, a land-care facility, and sites for an estimated 8-10 academic
buildings in the future. It will have
surface and ramp parking and there are plans to include light-rail transit and
buses. There will be plazas and public
spaces, utility expansion and storm water management, and road
realignment. It is a gateway to the
University in many ways, she said, and through to athletics. This is an old industrial site, Vice
President O'Brien pointed out, and some environmental remediation will be
required, and Vice President Pfutzenreuter is developing principles to capture
and allocate appropriately the cost of remediation as well as infrastructure,
amenities, and other common goods.
Vice President O'Brien reviewed the progress to date in
the district. Infrastructure projects
are being completed, the city and county have approved changes to the Oak
Street and University Avenue layout, reports have been submitted to the
Minnesota Pollution Control Agency about environmental remediation (part of the
site included a creosote plant), design has begun on the new Medical
Biosciences Facility (MBB) funded by the legislature last year (schematics will
be done this winter), and a number of buildings have been demolished. The University has spent about $8.5 million
thus far. She reviewed these items on a
map and reported that the
One final map showed a long-term concept for the
district, which, Vice President O'Brien emphasized, is a concept, not a
plan. The concept showed where various
new academic buildings might be as well as a transit hub.
They have followed the principles adopted before the 2003
feasibility study, Ms. O'Brien said, and it has been helpful to have them.
With respect to the stadium specifically, Vice President
O'Brien said the project executive committee is in place, a group that she and
Athletic Director Maturi co-chair; it also includes faculty, staff, and outside
experts. The architectural and design
engineering firms have been retained; there is also a work group of faculty and
staff to provide information on sustainable design and operation issues. The athletic department completed a market
and pricing analysis with an expert firm that examined fan expectations and
demand for premium seating and amenities.
The programming phase included significant consultation with more than
40 meetings with a wide variety of internal and external groups.
The orientation of the stadium will be east-west, as was
Memorial Stadium; they studied wind, light, and other stadia to help make the
decision. The stadium will be a
horseshoe, open to the campus. Professor
Speaks asked if the east-west orientation will affect when games can be
played. Vice President O'Brien said it
would not; their study around the country suggested that no matter which way a
stadium is sited, sometimes there is shade and sometimes sun. The 35 suites to be built will be on the
south side, looking north (which puts these mainly in the shade while most of
the open seating will be in the sun).
The University has received three qualified responses for
a construction manager and general contractor.
All of them have extensive experience working with University projects,
all are local (and will use several
Professor Konstan asked about three matters. First, there appears to be no support for an
all-University graduation ceremony in the stadium; is that a goal? Second, has there been any thought given to
the suitability of the stadium as a temporary home for the Vikings if they are
without a site during construction of a new stadium? Third, has there been attention to acoustic
issues, like noise from events during class time? Vice President O'Brien answered the questions
in reverse order. On noise, this was
addressed in the environmental impact statement; the University will meet state
and local standards on noise levels so that stadium events are not a problem
for the campus or the neighborhood. On
the Vikings, the University is building a university stadium. On graduation, people have mentioned a
ceremony, but it is not being accommodated in the design (nor was it planned in
Memorial Stadium, she observed). But the
stadium could be available for an all-campus or all-University graduation. Professor Martin expressed doubt anyone would
wish to attend a graduation event with multiple thousands of grads getting
degrees, although Professor Konstan suggested it would not be an event where
everyone actually receives degrees.
Vice President O'Brien repeated her point that the East
Gateway District is more than bringing football back to the campus. They are building a new part of campus to
house academic programs and research activities as well as to connect to the
community. As they revisited the
feasibility study (which accounts for about 1% of the effort) and moved to
schematics (which accounts for about 15%), they recognized the need for
additional components that were not in the plan before. One, there will be a continuous brick curtain
wall around the stadium rather having the building open under the seats. Two, the risers and seats need to be sized so
no future reconfiguration would be needed.
Three, they concluded they wanted a "greener" building. These decisions have the potential to
increase the cost of the stadium. They
have also learned the soil, that contains peat, requires a structural solution,
which will also carry additional cost.
Inflation and contingencies will increase the cost as well. The project team is trying to do what is
right so the stadium is a serviceable, enduring facility. Funds to cover any additional costs will NOT
be sought from the state nor will they come from tuition or any source that
jeopardizes academic programs. As a
result, they are carefully balancing what can be included in the stadium. Mr. Pfutzenreuter repeated Ms. O'Brien's
earlier point: the project has gotten
more complicated than just a stadium, and they want to be sure they gather
costs and allocate them appropriately to the district and to the stadium; he
said they are using guidelines that parallel those used in Circular A21.
Professor Speaks also had several questions. First, what is the schedule of fund-raising
to cover the University's portion of the costs?
Two, in terms of noise levels, most architectural firms have little
expertise with acoustics; the University should be sure the firm has an
acoustics expert or retains one. Three,
the newspapers have reported that there are unexpected inflationary costs; why
are they unexpected rather than built into the estimates? Four, why did not the original soil tests
indicate a bog?
On
the point about inflation, Vice President O'Brien said that inflationary
increases were built into the projects but in the volatile marketplace, some
materials and labor costs have increased beyond what was projected. On the bog, she said it was not a surprise;
the original soil tests indicated it was there.
The feasibility study provided an estimate of the cost of dealing with
it; the schematics led to a better understanding of what needs to be done—that
is a natural part of design development.
Professor
Speaks noted that the newspapers report that the obligation to cover the
additional costs will rest with the
athletic department. In the current
fiscal year, the athletic department is expected to have a year-end balance of $2562,
which does not take into account the cost of a new men's basketball coach. Where will the money come from that the
athletic department is responsible for?
Mr. Pfutzenreuter said that the University still needs to raise about $42
million toward its portion of the stadium cost; the President is committed to
getting the job done, although it may take three or four years. He explained how the additional costs might
be covered and said he believes they will be manageable.
Professor
Martin thanked Vice Presidents O'Brien and Pfutzenreuter for the report.
Professor
Hendel observed, after the two vice presidents left, that the East Gateway
District is a large project; he asked what processes had been used to involve
the surrounding community. Often there
is tension when a university expands into neighborhoods; he said he had been
glad to hear there appear to be no major objections. Professor Martin said that Jan Morlock in
University Relations has worked extensively with the neighborhoods, which were
mostly concerned about the noise. Facing
the stadium into the campus will help.
A
question was raised about private summer camps on campus. It was agreed that Mr. Kallsen would explore
the issue and report back to the Committee.
Professor
Martin wished everyone a happy holiday and good break and adjourned the meeting
at 4:25.
--
Gary Engstrand