Campus Resources and Planning Committee

November 16, 2009

Present: Pete Wyckoff, Carol Marxen, Syndey Sweep, Mark Privratsky, LeAnn Dean,

Sarah Mattson, Maddy Maxeiner, Jacquie Johnson, Brook Miller, Naomi Wente,

Bryan Herrmann, Bart Finzel, Dave Swenson, Lowell Rasmussen, Sara Haugen,

Pam Gades

Guests: Linc Kallsen, Gwen Rudney, Pareena Lawrence, Cheryl Contant, Sandy Olson-

Loy, Jennifer Zych-Herrmann

Sydney Sweep made a motion to approve the minutes from 11/2/09 and 11/9/09 until the meeting. So moved.

Pete mentioned that Linc Kallsen was with the committee again today and has brought the spreadsheet with him for the committee to work with. Pete went on to mention a couple of sobering thoughts about the work before the committee. He believes that whatever we do here, it’s implied that we are taking the prospect of additional state aid off the table, and thus our reliance on our other revenue streams will increase dramatically. Additionally, we can expect the relative price of higher education to continue to rise compared to other goods and services because productivity can’t rise substantially in higher ed without compromising the quality of the product we deliver. Because most of our costs are employee based, he believes we will be under continuous pressure to increase productivity (examples on the academic side: increased class sizes, more classes taught per professor). Pete believes we should grab productivity gains when we can do so without reducing quality, but also that we need to resist the pressure to solve our problems only through increased productivity: if we begin to look like MnSCU school, but with U of M prices, we are in trouble.

Sydney asked about the reinvestment pool for FY11. If every school in the University of Minnesota system has to reallocate, what costs would be taken from that pool. Linc responded that if utility costs go up on an extraordinary rate, it’s possible we might say that this is beyond what campuses may be able to handle on their own. There is some contingency built in.

Maddy noted that there are assumptions built into the budget about the legislative funding for the next biennium. Linc added the figures on the spreadsheet assume our current allocation stays unchanged. Basically we took all of our cuts from the state in one year and have assumed a flat allocation in FY11. If the legislative funding changes, we could need to readjust the figures. He added that in the out years, we would be fortunate to remain flat in terms of state allocation. In FY14-15 we’re back to normal again. He has plugged in 2.2% in O&M allocation because that has been our average over a 15 year period; 5% for tuition and fees. Linc added there would be a significant increase in fringe costs for Civil Service/Bargaining Units due to the Retirement Incentive Option. The percentage is going up because of a lower salary base on which the expenses will hit. Additionally, health care costs are going up faster than salary base. Brook asked if the 2% salary increase reflects historical realities. Linc said we could get to that detailed level but not on this spreadsheet. Utilities, repair and maintenance are always set a little higher and we hope we can come in lower. Without an increase of state money and with relatively modest salary increases, we will still end up with a $500,000 a year problem; however, that will level off in the out years.

Regarding the plug and play with the spreadsheet, if we add 30 students our net position improves but it would also impact other numbers, e.g., merit scholarships, external sales, etc. The enrollment management subgroup needs to inform us how these numbers are impacted and how changes in enrollment and academic staffing and support staff will impact future numbers.

Brook asked if the de-allocation would continue in FY12 and FY13. Linc said we would set a new lower recurring base. The Senior VP and the President can look at these numbers, but this is how the planning is structured. The reallocation pool could put monies back it if allocations are for certain things.

So back to a balanced budget in FY10 and paying back deficits, now we have a $652K problem to solve through more students, less spending or reviewing assumptions already made. Pete noted there are so many things we can’t change and asked if Linc could tell us about those and if there are specific numbers we should use. Linc said out-year planning is more dynamic but can be justified based on historical averages. Additionally, campus reserves can do wonders to help the campus do good planning. Jacquie noted that whatever we go with is still a guess and even though Linc’s opinion does matters, it is still ultimately a guess. What might matter more is for us to think about what types of things we can do that have an impact on this campus. There are a number of places where we do have to make some decisions and one of those is to take a careful look at the amount of merit scholarships. Some of these conversations have already started with Cheryl and the division chairs. The budget we loaded for the fiscal year was based on numbers from this fall and we don’t know yet what retention will be from fall to spring. There are many expenses we can’t control, e.g. utilities, but we need to find ways to increase revenue like pursuing online courses and increasing our conferencing and summer programs. There are many places where we need to have open and candid conversations. This is the kind of educational piece we’ve been hoping to do so more people on campus understand the process. Pete wants the entire committee to understand how this works and would like to get the spreadsheet out to the committee so they can play around with some of the numbers. He believes it’s hard to get a grasp on some of it until you actually play with the numbers. While Jacquie understands the value of playing with the numbers, she is worried about the potential for people to share this information and make conclusions of the information on their own. She asked if we could set it up with restricted access not because the work this committee does is a secret but that the information can be easily misinterpreted. Speaking from experience, she would not underestimate the seriousness that misinterpreted information would be shared. Pam suggested forming a subcommittee to do the number crunching and letting that small group have access to the spreadsheet. Pete suggested that as a compromise, several computers be brought to the next meeting so people could break out into groups to work on the spreadsheet.

Linc said this could be an educational tool and will help people understand where the money is. It also helps define the academic strategic plan of the campus so we have enough parameters as we work to build budgets. Jacquie added that our work is to make the best decisions that impact the quality of students while maintaining our mission.