These minutes reflect discussion and debate at a meeting of a committee of the University of Minnesota Senate; none of the comments, conclusions, or actions reported in these minutes represents the views of, nor are they binding on, the Senate, the Administration, or the Board of Regents.

Minutes

Senate Committee on Finance and Planning

Tuesday, May 15, 2007

2:30 – 4:15

238A Morrill Hall

Present:

Judith Martin (chair), Jesse Andrist, Rose Blixt, Rachel Curtiss, Daniel Feeney, John Fossum, Darwin Hendel, Lincoln Kallsen, Thomas Klein, Joseph Konstan, Michael Korth, Mikael Moseley, Kathleen O'Brien, Justin Revenaugh, Michael Rollefson, George Wilcox

Absent:

David Chapman, Steve Fitzgerald, Kathryn Olson, Richard Pfutzenreuter, Terry Roe, Karen Seashore, Thomas Stinson, Nicholas Treat, Michael Volna, Warren Warwick, John Ziegenhagen, Aks Zaheer

Guests:

J. Peter Zetterberg (Institutional Research)

[In these minutes: (1) annual capital budget; (2) undergraduate tuition issues; (3) report from the Subcommittee on Twin Cities Facilities and Support Services]

1. Annual Capital Budget

Professor Martin convened the meeting at 2:30 and turned to Vice President O'Brien to give a report on the annual capital budget.

Vice President O'Brien distributed a handout with the capital budget items by campus and college. She explained that this budget was presented to the Regents in May for information and will be brought for action in June (as is almost always the case)—and will be changed as needed, depending on state action on a bonding bill. The annual capital budget is year one of the six-year capital plan and includes projects with completed design and with funding identified so that they can move into construction. This budget includes only projects over $500,000 (there are many more that cost less that are not listed). The annual capital budget authorizes projects to move forward.

The proposed capital budget for 2007-08 totals $86.7 million, of which $38.9 million is being requested from the state (amounts that were in the bill the Governor vetoed). The state funds were for HEAPR (repairs and renovation) and for restoration of the former Department of Health building on Delaware Street for Academic Health Center units. Vice President O'Brien reviewed the various projects on the list.

Committee members asked questions about some of the projects. Discussion touched on (TC) bookstore remodeling, funding for the Rochester campus, the Weisman Art Museum expansion, Veterinary Medicine equipment and remodeling, the extent to which some of the auxiliary/support service projects will be part of the cost pool charged to units (they will be in part), and how the repair and renovation funds are distributed (by allocation to the highest-priority items and the funding is never sufficient).

The Committee focused on the Rochester campus. Vice President O'Brien explained what is happening with the temporary (a six-year lease with extensions possible) facility being readied for use. (The City of Rochester contributed one-half—$4 million—the cost of the capital improvements needed.) The University has also launched a master planning process for the campus. The intent is to build the faculty for programs as well as use faculty in the area (e.g., from the Hormel Institute). If there is (were) more efficient transit to Rochester, Professor Martin commented, faculty from the Twin Cities campus would likely be more involved. Ms. O'Brien suggested the Committee have a conversation with Senior Vice President Jones, who has responsibility both for the Rochester campus as well as the North Side Initiative; they have programmatic and financial implications.

In response to a question about space and budget for student service functions, Vice President O'Brien said she did not know the exact amounts but that because this is an interim facility, the master plan will analyze needs (which will depend on what academic programs are offered and the rate at which they grow).

All of the Rochester costs are funded from an appropriation to the University directed to Rochester. And in theory, Mr. Rollefson commented, the permanent facility will be funded in the same fashion. That is the President's belief, Ms. O'Brien said, and the Rochester community has demonstrated very strong local support.

Professor Martin thanked Vice President O'Brien for the presentation and discussion.

2. Undergraduate Tuition Issues

Professor Martin welcomed Dr. Peter Zetterberg to the meeting to discuss undergraduate tuition issues.

Dr. Zetterberg distributed a handout that summarized undergraduate objectives for improvement of undergraduate programs,, problems with the current tuition structure, and proposed tuition reforms. The objectives include recruiting more high-ability students, helping students succeed, and "improving the overall academic profile of freshmen, increasing the diversity of undergraduate students, increasing the enrollment of international students, [and] improving the 4-year and 5-year graduate rates significantly." In addition, "it is very important that the University and the state that the University maintain or increase its production of baccalaureate graduates."

The problems with the current tuition structure are multiple, Dr. Zetterberg explained.

"1. The University's nonresident tuition rates for undergraduate students are too high on the Twin Cities and Duluth campuses [about $21,000. It is probably too high at most institutions but some schools can charge it, such as Colorado, Michigan, and Wisconsin—which draws from Chicago and New York—but they are exceptions. Most non-resident tuition rates are set at levels to keep non-residents out.] As a consequence, it is very difficult for the University to recruit nonresident students, except by discounting a significant amount of the nonresident rate. It is also very difficult to recruit international students."

"2. There is no justification for the nonresident tuition rates for undergraduate students on the Twin Cities campus ($20,193) and the Duluth campus ($19,688). These rates are at least $7,000 more than the fully-allocated cost of instruction (which is about $12,000 – 13,000). For most campuses nation-wide nonresident tuition rates are archaic fences serving no useful purpose."

"3. The number of high school graduates in reciprocity states will decline significantly over the next 10 years, especially in North and South Dakota (they will lose about 20% of their high school graduates). Since the number of high school graduates will also decline more modestly in Minnesota, it will be difficult for the University to maintain its undergraduate enrollment, with the desired profile, unless it can recruit students from outside Minnesota and the current reciprocity states, where there will simply be fewer high-ability students to recruit." The universities of Washington, Wisconsin, and Minnesota (Twin Cities) are large research universities in small-population states that can never get the enrollment they need only from their own residents; for Minnesota, it must go to surrounding states. Dr. Zetterberg also reported that it is unique to the Twin Cities campus of the University that it has a high number of nonresident students, most of whom are from reciprocity states; most states do not have reciprocity agreements. Wisconsin is able to keep its resident tuition rates low because of the large amount of nonresident tuition it receives. (Minnesota students going to Wisconsin pay about $1500 more than Wisconsin students; Wisconsin students who come to Minnesota pay about $1200 less than Minnesota students.)

"4. Resident tuition rates on the Duluth and Morris campuses are far above market (e.g., comparable rates in Wisconsin). The rates on the Duluth and Morris campuses are also higher than on the Twin Cities campus, which is nonsensical."

Why nonsensical, Professor Konstan asked; the students have a different experience. That was the original argument, Dr. Zetterberg agreed, but now the price is way above market, which makes it more difficult for the campuses to recruit students. There is not a significantly different cost of instruction between the campuses. At other systems with a research university campus and other campuses, none of the other campuses have tuition higher than the research campus; this difference in Minnesota is unusual.

"5. While the University expects higher retention and graduation rates on all four campuses, only the Twin Cities campus has a tuition structure that supports such expectations by providing a financial incentive that encourages students to take higher credit loads, namely a 13-credit tuition band." If the expectations are the same on all campuses, Dr. Zetterberg said, one can argue that they should all have the same tuition banding.

Professor Martin asked if the 13-credit tuition band was an experiment. Dr. Zetterberg said it was not; he and President Yudof were scared that average credit loads would drop with the change to semesters, so in 2003 the campus went to the 13-credit band and students were required to take 13 credits. The effect was remarkable in the change in freshmen expectations; the number of students who seek exceptions to the 13-credit requirement is low and average credit loads increase every year.

"6. While the University is concerned about the cost of higher education for undergraduate students, only the Twin Cities campus, with a 13-credit tuition band, offers students a financial incentive that students can use to manage the cost of their education by graduating in four years rather than five." The way to save money is to graduate in four years, not five, Dr. Zetterberg said; that will save a student about $20,000. The decision to increase tuition by 2.5% or 4.5% is peanuts in comparison. The tuition band is a big incentive—and the more tuition increases, the more of an incentive it is to graduate in four years.

"7. Many policy makers and business leaders are legitimately concerned with workforce issues. Will the state produce enough college graduates to meet future needs?"

"8. The Wisconsin tuition reciprocity agreement has greatly benefited students and their families in both states, but its specific, current provisions are not acceptable. Under these current provisions, Wisconsin reciprocity students pay significantly less than Minnesota residents to attend the University's campuses: $2720 less at Morris, $1737 less at Duluth, $1573 less at Crookston, and $1191 less at the Twin Cities campus. In addition to the obvious fairness issue, this costs the University more than $7 million in annual tuition revenue."

Mr. Klein recalled that according to an article in the newspaper, Wisconsin is paying what it should but the money is going to the State of Minnesota, not the University. Dr. Zetterberg explained that, first, reciprocity students are treated the same as resident students but there is no Minnesota higher-education funding formula based on the number of students; when there was, the state provided the same amount for both groups. Second, there is a settlement between the states at the end of the year when one is doing more than the other; there are 14,000 Wisconsin students who come to Minnesota but only 12,000 Minnesota students who go to Wisconsin. The tuition is taken into account when the settlement is reached. The State of Wisconsin is paying the State of Minnesota about $7.8 million; why not give it to the University since it is losing about $7.3 million in tuition (the similarity of the numbers is purely a coincidence). The State of Minnesota has never reimbursed the University for the lost tuition.

The Committee and Dr. Zetterberg discussed, off the record, a number of possible changes to the University's undergraduate tuition structure.

Professor Martin thanked Dr. Zetterberg for joining the meeting.

3. Annual Report, Subcommittee on Twin Cities Facilities and Support Services

Professor Martin turned now to Professor Wilcox for a report from the Subcommittee (STCFSS).

Professor Wilcox said the Subcommittee had identified 10 items at the beginning of the year and dealt with 6 completely, discussed 2 in part, and deferred the other 2 to next year. They have also identified about 8 new items for next year. The items they took up this year included, among others:

-- Facilities Management transformation

-- Northrop Auditorium

-- A report from the Office of Classroom Management (OCM) (on technology and accessibility)

Professor Wilcox reported the office received $3.7 of the $5 million it needed but things are getting done. The Subcommittee asked about the backlog of work and was told there is some but less than there used to be. One STCFSS member commented that architects are sometimes bad at designing classrooms; the OCM director had replied that it has developed a set of classroom standards to help them. Professor Martin said that Mr. Fitzgerald (Director of OCM) has indicated that general purpose classrooms have been upgraded but departmental classrooms and those that are more specialized are lagging behind.

Most of the issue has been about how to get classrooms up to today's standards, Professor Konstan said, but he asked if anyone is thinking about what will be needed in five or seven years (power at each seat, interactive video, etc.)? Power at each seat is very expensive and retrofitting is difficult, Professor Wilcox said, but they are putting conduit in as some classrooms are built or renovated to allow for the possibility in the future. Seating will also be more flexible in the future. Mr. Moseley said that he has noticed many faculty use interactive learning but they do not like students to bring laptops to class (they're a distraction), but if faculty are unwilling to get away from the traditional lecture and provide interaction, there's no need for more flexible classrooms. Is the flexibility being provided so faculty can use it or is it being provided at faculty initiative? Professor Konstan said the University loses faculty willing to try new ways of instruction unless the flexibility is available. This will be an item for the Subcommittee next year, Professor Wilcox said: forward-looking classroom design.

Professor Feeney asked if there has been a migration of department classrooms to the general purpose category, given space charges in the new budget model and the availability of central funds to help upgrade classrooms. The numbers have changed, Professor Wilcox said. The acquisition of equipment has been an incentive to move a classroom to general purpose use. It may be that given the gradual change to more interactive instruction, the change from departmental to general purpose category may be going at about the right rate, Mr. Klein speculated.

For next year, Professor Wilcox said the Subcommittee has identified these issues:

-- graduate/professional student housing

-- Andersen Library

-- the greening of campus and becoming more carbon-neutral

-- revisiting the food and beverage RFP

-- an update on campus master planning

-- storm-water management

-- update from Capital Planning and Project Management

-- revisit Northrop.

Professor Konstan suggested as a topic landscaping on the Twin Cities campus, which relates to how one envisions the campus (e.g., the number of benches). Professor Martin reported that there is a team focused on open spaces as part of the campus master planning process. Professor Wilcox said the Subcommittee could request an update on the subject as part of the greening of the campus.

Professor Martin said there is a strong interest in sustainability. Mr. Klein noted that Vice President O'Brien has repeatedly said that the University would not build all 28 million square feet is has if it were building from scratch. The question comes up about what should be kept and what should not; are there any principles of destruction? Professor Wilcox said the Subcommittee heard from Michael Perkins about the rationale for demolishing, saving, and building. Professor Martin said the campus master planning process is also considering that matter. There will be nothing to report on campus master planning until December, she said, because the various working groups will not be done before then.

Professor Martin thanked Professor Wilcox for his report and adjourned the meeting at 4:10.

-- Gary Engstrand

University of Minnesota