Regents reduce financial oversight

The University of Minnesota Board of Regents approved nine goods and service purchase deals this month. But if the same list of purchases had come just one month later, they wouldn’t have had to even read it.
Under a policy amendment approved at last week’s meeting, the board opted to change some aspects of its authority over major purchases. Previously, all individual purchases of goods and services costing more than $250,000 required board approval. After the 11-1 vote Friday, that threshold was increased to $1 million.
Regents say increasing the threshold for purchases requiring board approval will improve efficiency when dealing with money already budgeted for spending.
Each month, the board’s finance and operations committee reviews the potential transactions and approves them. Michael Volna said that since he became the University controller in 2002 he has not seen the board reject any requests.
“Two or three times a year, the board will ask questions about a specific purchase before they approve it,” he said. Questions tend to come only when the purchase is more visible to the community outside the University.
Regent Chairman Clyde Allen, who also sits on the finance committee, said the regents agreed their time could be better spent looking into bigger issues, such as the University’s budget and the issues with the Central Corridor light-rail line.
Allen said it isn’t necessary to focus on the minute details of a $250,000 purchase when the University has a $3 billion budget.
“These items that we approve are all budgeted for,” Allen said.
During fiscal years 2007 and 2008, the committee approved 203 purchases. Only 69 of those were over the new $1 million threshold.
The biggest impact of the change will be saving time.
“[Departments’] purchases aren’t going to be held up awaiting board approval,” University Purchasing Services Director Karen Triplett said.
During the months the board doesn’t meet, big departmental purchases are put on hold awaiting approval.
Now that will only happen when the amount reaches $1 million, Triplett said.
For the board, looking at where the University is putting its money provides insight into what is happening around the institution as a whole, Allen said. And the efficiency gained through upping the threshold is more important than getting information for information’s sake.
The finance committee is still working out whether it will request the “over $250,000” items anyway, purely for information purposes.
The University’s position among the Big Ten when approving purchases also influenced the regents’ decision to remove some of their power from the process. The process already requires competitive bidding and approval from Triplett’s office.
According to information gathered by the University, the University of Illinois is the only university in the Big Ten Conference that requires board approval at a lower threshold than that previously set by the University of Minnesota. Illinois’ Board of Trustees oversees equipment and supply purchases greater than $200,000.
Most universities in the conference allow administrators to handle the final approval process.
Michigan State University, Indiana University, the University of Michigan, Pennsylvania State University and Ohio State University require no board action at any monetary level for the same purchase category.
The University of Wisconsin system has a threshold set at $500,000, and the University of Iowa’s is set at $1 million.
“It’s a matter of always trying to balance where do we spend one of most precious things we have, and that is our time and effort,” he said.

-Taryn Wobbema is a senior staff reporter.