In the last two decades, the share of the University of Minnesota’s budget that comes from the state has dropped by more than half.
Tuition in that time has increased by more than six times for undergraduate state residents.
University data from the end of fiscal year 2012 on June 30 shows that tuition accounts for an average of 44 percent of a college’s operating budget.
Chief Financial Officer Richard Pfutzenreuter said the decline in state funding has made colleges more dependent on tuition money to cover costs.
“That means, I think, that colleges have had to pay a lot more attention to student needs,” he said, “because the students are paying an increasing share of the cost of education the state’s not.”
University President Eric Kaler has proposed a tuition freeze for the next two years, but it has to be approved by the state Legislature and would cost the state $28.4 million.
Brian Arndt, a youth studies, sociology and social justice junior, said he fully supports Kaler’s proposal to freeze tuition.
“We think of [money] spent on education as a public good,” he said, “but the burden of that cost is being pushed onto families and individual students.”
Although 36 percent of University students graduate without debt, those who do take out loans have an average of $27,578 in debt.
Tuition, state appropriations and other University funding flows directly to the colleges.
The majority of this money is spent on faculty and staff salaries and benefits because the University is a “people business,” Pfutzenreuter said.
Cost pools make up the next largest expense for colleges. These are services and materials the University charges the colleges for, like utility bills, technology, libraries and building maintenance.
Pfutzenreuter said cost pools are calculated based on the best unit of use. Utility costs are based on how much energy the colleges use, for example, but cost pools like technology services are based on the number of students, faculty and staff in a college, so the bigger colleges pay a larger share.
The cost pool methodology, Pfutzenreuter said, is a fair way of charging colleges for services.
For the most part, colleges spend exactly, or close to exactly, what they receive by the end of each fiscal year. The Office of Budget and Finance makes sure the colleges don’t spend more than they have, Pfutzenreuter said.
If they don’t spend it all, he said, it’s usually because they are expecting a big expenditure the next year — like a new piece of equipment or a costly new hire — or they received money close to the end of the year and didn’t spend it.
When colleges submit their budget proposals each year, Pfutzenreuter said Kaler and senior academic leaders sit down to talk about what the college needs and how the University can accommodate them.
Transparency, Arndt said, is an important step in showing the University is being responsible with taxpayer and tuition money.
“Every institution, especially one as large as the U of M,” he said, “needs to be accountable to how they’re spending their money.”
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