A financial crossroad: U to narrow academic focus


Decreasing state aid and increasing tuition is forcing the University of Minnesota to function more independently of the state financially and narrow academic focuses to invest in its most promising areas.

Administrators deny the course will provide less access for students of varying economic backgrounds because private donations and financial aid will help the University balance the cost to students.

“It’s clearly a direction policymakers have been pointing us to for decades,” Richard Pfutzenreuter, chief financial officer, said of the rising cost of education. “It seems like an unstoppable trend.”

Declines in state funding have forced the University to start developing long-term financial plans to close an anticipated revenue gap. After a task force report to the Board of Regents on Oct. 8, it became clear that tuition has become the largest revenue source for the University.

This year, tuition makes up 26 percent of the University’s budget while state appropriations contribute 21 percent. This is the first year tuition has surpassed state funding, according to the task force’s report.

In the past, Sen. Sandra Pappas, DFL-St. Paul, the chairwoman of the Senate Higher Education committee has said the University remains a bargain for families that would have otherwise opted for a private school, but others struggle to pay for schooling.

Administrators pointed to the University’s Promise Scholarship program that guarantees free tuition for low-income Minnesota residents who qualify for the federal Pell grant. A new initiative this year gives students from Minnesota with a family income of less than $100,000 up to $1,750 in scholarships.

Michael McPherson, president of the Spencer Foundation – an organization dedicated to researching all levels of education – said it is a definite trend that states are allocating less to state colleges and universities, forcing those institutions to increase the cost to students.

McPherson said public institutions don’t have much choice; they “either lower the quality or raise the price.”

With a goal to become a top research institution, the University has made clear that it’s committed to increasing, not decreasing, quality.

According to the task force report, the University will work on identifying specific areas of “excellence” and funneling funds there. Besides cutting costs, this would be in an effort to bolster the University’s reputation in the higher education marketplace.

Specific areas of excellence have not been identified.

“If we continue to try to do everything we’ve been doing, it’s going to be an inch deep,” Pfutzenreuter said. Focusing on fewer areas but providing substantial funding to those areas will provide that increased quality.

Clyde Allen, chairman of the University’s Board of Regents said the University’s goal to become a top three research University shows more progress in some areas than others.

According to data from 2007, the University ranked 10th among U.S. public research universities in total research expenditures.

“We are the state’s only research and land grant university, so that puts a special set of responsibilities on us,” University President Bob Bruininks said. “This University has not diminished its broad access to students.”

Bruininks said the trend to financial independence from the state is not favorable. University administrators will push for higher education to receive more attention from the state.

Administrators told lawmakers last session that they couldn’t foresee the University ever operating without state funding.

Until funding increases, Bruininks said he suspects more students will enroll in community colleges to lower costs and later transfer to a four-year institution.

But tuition can only solve about a third of the problem, Bruininks said.

The second aim of future financial planning revolves around the evaluation of every activity the University conducts to look for ways to prioritize programs and departments – academic and administrative.

“The breadth of what the University does is important to the state, but with the state funds declining, the University needs to take a sharp look at what we can and can’t do,” Pfutzenreuter said.