At Legislature, more money comes with more problems for University

Most amendments failed but altogether were symbolic of legislators’ concerns.
April 18, 2013

Increased funding for the University of Minnesota passed the full Minnesota Senate on Wednesday, but state leaders continued to voice concern about the school’s spending.

Legislators passed the bill, which would freeze tuition for Minnesota undergraduates at the University, but proposed numerous amendments aimed at the University’s spending, varying from preventing state money paying for administrative salary bonuses to raising out-of-state tuition.

Although the majority of the amendment failed, they represent legislative concern for how the University operates with state money.

Senators pointed to a Wall Street Journal article from December that initially raised concern for University spending and a recent Star Tribune opinion article by former Gov. Arne Carlson that criticized the institution’s alleged high administrative costs.

Legislators need to make sure state funding is “actually used for students,” said Sen. Carla Nelson, R-Rochester, on the Senate floor Wednesday.

The University has gotten worse with its spending since Carlson entered office more than two decades ago, he said in his op-ed.

Carlson cited high salaries for employees, like recently resigned University General Counsel Mark Rotenberg, who makes more than the chief justice of the U.S. Supreme Court.

“This mirrors the overall explosion of administrative salaries,” he wrote.

On Wednesday, Sen. Scott Newman, R-Hutchinson, attempted to amend the bill sponsored by Sen. Terri Bonoff, DFL-Minnetonka, to address these concerns.

Newman tried to mandate the University reduce its administrative spending by $15 million in order to receive its full amount of state funding.

If University President Eric Kaler is sincere that spending is out of control, Newman said, then he needs to control the school’s “runaway costs.”

The motion failed, but the bill still withholds 5 percent of the University’s funding if the school doesn’t meet three of five performance goals, one of which includes cutting administrative funding.

Newman also proposed amending the higher education bill with what he called the “Tubby Smith amendment” to make sure state dollars aren’t being used for multi-million dollar buyouts in the University’s athletics department.

State law has prohibited the University from doing so since 2007, but the Senate still added the amendment.

“I think because there’s been so much attention on the overall administrative costs cited … and there’s been a public outcry to the coach situation,” and the Senate passed Newman’s amendment to address those concerns, Bonoff said.

She said some concerns of the University’s administrative spending are overblown.

An early review by Sibson Consulting of the University’s administrative costs, which will be finalized in July, showed the school was in the normal range for administrative spending, Bonoff said.

“I do believe the U is doing their best,” she said.

Unlike the House’s version of the bill, the University has to meet three of five goals — one of which includes decreasing its administrative costs — or 5 percent of its appropriation would be withheld in the next biennium.

Last week, chair of the House higher education committee Rep. Gene Pelowski, DFL-Winona, said he would be willing to add the performance goals into his bill after more discussion.

A change made Wednesday by Nelson — one that mirrors Pelowski’s bill — ensures state funds aren’t being used for administrative salary bonuses at the University.

Sen. Julie Ortman, R-Chanhassen, proposed a change to the bill recommending three-fourths of the incoming freshmen at the University be from Minnesota.

She said it’s disappointing only 63 percent of the freshman class is from Minnesota.

Bonoff said she opposed the amendment because the University shouldn’t limit its number of out-of-state students if it wants to stay globally competitive.

“We may not have the best weather, there may be a few other things about our state that make it perhaps less attractive than say, California, to a young person,” she said. “So anything we can do to remove barriers to get more young people to our state is something I would support.”

Another attempted change to the Senate’s bill would’ve encouraged the University Board of Regents to keep tuition for out-of-state students competitive with other schools in the Big Ten.

The University has the second-lowest tuition gap between residents and non-residents compared to the other 12 schools in the conference. There’s a $5,250 difference between resident and nonresident tuition.

The measure failed. The University had already planned to raise non-resident tuition in the fall, and Bonoff said it’s not the Legislature’s job to set tuition.

The bill would increase funds by $263 million statewide to freeze tuition at the University and Minnesota State Colleges and Universities,  invest in research and provide more financial aid for Minnesota college students.

An amendment added Wednesday also prohibits MnSCU schools, which are controlled by the state, from raising tuition more than 3 percent per year.

The increased funding for higher education comes after nearly a decade of budget cuts.

Gov. Mark Dayton cut higher education spending $363.6 million in the last budget — the current biennium — but is now proposing to increase it by $260 million, like the Senate, for the next two years.

Associated Content

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