a complete accounting

8/13/2019 A Complete Accounting

1/3

A Complete Accounting

President Kaler calculates that his administration has reduced the annual cost of administration by $32 million. See his interview in the November 22, 2013 issueof Twin Cities Business magazine . But his calculation includes only theadministrative costs that have been reduced. It omits the administrative coststhat have increased.

For the last two fiscal years the administration has presented an expensesummary for cost benchmarking to the Regents. The summary divides expensesinto three broad categories: direct mission activities (instruction, research, andpublic service), mission support and facilities, and leadership. See the fiscal year2013 summary at Presentation Slide FIN Item 1.

The total expenses for direct mission activities increased $33 million (from$1,484,823,216 in fiscal year 2012 to $1,518,062,538 in fiscal year 2013). See thecomparison at p. 9 of the 2013 summary.

A Complete Accounting - 1
http://www.google.com/url?q=http%3A%2F%2Fregents.umn.edu%2Fsites%2Fdefault%2Ffiles%2Fdocket%2FOct2013_port.pdf&sa=D&sntz=1&usg=AFQjCNHnaYjYpsDfKNRPyg61D2PJfRucHghttp://www.google.com/url?q=http%3A%2F%2Fregents.umn.edu%2Fsites%2Fdefault%2Ffiles%2Fdocket%2FOct2013_port.pdf&sa=D&sntz=1&usg=AFQjCNHnaYjYpsDfKNRPyg61D2PJfRucHghttp://www.google.com/url?q=http%3A%2F%2Ftcbmag.com%2FLeadership%2FLeaders%2FThe-Interview-Issue%2FEric-Kaler&sa=D&sntz=1&usg=AFQjCNGPLYDvVW0QaUt22J7NyEMt-8d_1Q


2/3

There were reductions of certain expenses in the other two categories (missionsupport and facilities and leadership) of approximately $32 million. But there

were increases in other expenditures in those two categories that were evengreater. Some of the increases were for compensation for administrators andstaff and other increases were for non-personnel expenses such as administrativesupplies, administrative equipment, repairs, and maintenance.

There was a net increase of $41.7 million in expenditures for mission supportand facilities (from $956,896,120 in fiscal year 2012 to $998,643,697 in fiscal year2013). There was a net increase of $7.9 million in expenditures for leadership(from $263,801,546 in fiscal year 2012 to $271,699,441 in fiscal year 2013). Seethe comparisons at pp. 11, 13 of the 2013 summary.

The one expense that is most symbolic of the cost of administration is thecompensation for leadership. The highly paid senior administrators, deans, anddirectors collected an additional $2,250,198 in compensation for fiscal year2013. (The total compensation for those leaders in fiscal year 2013 was$104,088,093.)

The administration spent an additional $560,773 on administrative consultingand professional services. (The total expenditure for such services in fiscal year

2013 was $35,376,469.)

Note that the total expenditures for mission support and facilities and leadership($1.27 billion) are almost as much as the total expenditures for the direct missionactivities of instruction, research, and public service ($1.52 billion).

The president deserves credit for recognizing that excessive costs of administration are a financial burden on students, parents, and the citizens of ourstate. But if the president is to be true to his pledge of transparency and

accountability, then he should not be publicizing a partial calculation of the cost of administration. We need and deserve complete candor (and a completecalculation) rather than a public relations campaign.

The president has promised to reduce the cost of administration by an additional$90 million over the next six years. That total amount is only 7% of the total



3/3

expenses in fiscal year 2013 for mission support and facilities and leadership. Wecan and should reduce those costs by a substantially greater percentage.

A former interim U of M president recently observed that "with real productivity gains, tuition could actually be reduced, assuming that state funding for the Uholds where it is at currently." See A Question of Productivity .

Reducing tuition is an objective that can be realized. Last year ConcordiaUniversity (St. Paul) demonstrated that tuition can be slashed (by $10,000 per year) when it recognized that the "high tuition high financial aid" experiment hasfailed. See the September 12, 2012 front page report in the Pioneer Press onConcordia Slashes Cost. We must once again make higher educationaffordable for all our children (just as it was for the senior administrators andRegents who set tuition today).

Michael W. McNabbUniversity of Minnesota B.A. 1971; J.D. 1974University of Minnesota Alumni Association life member

Originally posted on The Periodic Table, December 4, 2013

http://www.google.com/url?q=http%3A%2F%2Fptable.blogspot.com%2F2013%2F12%2Fa-complete-accounting-president-kaler.html&sa=D&sntz=1&usg=AFQjCNEr6WfJ0Aa8hGd56YMniILhOCBiMghttp://www.google.com/url?q=http%3A%2F%2Ftwincities.com%2Fci_21522035%2Fconcordia-university-slashing-tuition-financial%2520aid&sa=D&sntz=1&usg=AFQjCNHFBMAnGXw_A87QYeBDwwHmMHhslAhttp://www.google.com/url?q=http%3A%2F%2Fptable.blogspot.com%2F2013%2F11%2Fformer-interim-university-of-minnesota.html%23links&sa=D&sntz=1&usg=AFQjCNGnIavXaB3-tCpfYmokyufUSWJFXg

a complete accounting

Documents