U of M to spend money on study investigating whether it spends too much money

Much to the chagrin of Kaler (left), an in-depth Wall Street Journal report cast the U's administrative costs in an unflattering light.
Much to the chagrin of Kaler (left), an in-depth Wall Street Journal report cast the U's administrative costs in an unflattering light.

A December 28 Wall Street Journal report raised questions about the amount of money the U of M is spending on administrative costs at an unfortunate time - the university is seeking $91.6 million from the legislature for the next two years, a 8.4 funding increase over the current biennium.

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The Journal's report prompted two prominent DFL senators -- Majority Leader Tom Bakk and Higher Education Committee Chair Terri Bonoff -- to write a stern letter to U of M President Eric Kaler, and in response, Kaler announced the U will hire an outside consultant to review what the school is spending on administrative expenses.

In other words, the U will spend money on a study investigating whether it spends too much money.

Here's an excerpt from the Journal report:

Like many public colleges, the University of Minnesota went on a spending spree over the past decade, paid for by a steady stream of state money and rising tuition. Officials didn't keep close tabs on their payroll as it swelled beyond 19,000 employees, nearly one for every 3½ students. "The more questions I asked, the less happy I was," Dr. Kaler said.

Many of the newly hired, it turns out, were doing little teaching. A Wall Street Journal analysis of University of Minnesota salary and employment records from 2001 through last spring shows that the system added more than 1,000 administrators over that period. Their ranks grew 37%, more than twice as fast as the teaching corps and nearly twice as fast as the student body...

Administrative employees make up an increasing share of the university's higher-paid people. The school employs 353 people earning more than $200,000 a year. That is up 57% from the inflation-adjusted pay equivalent in 2001. Among this $200,000-plus group, 81 today have administrative titles, versus 39 in 2001.

Administrators making over $300,000 in inflation-adjusted terms rose to 17 from seven.

KARE 11 describes Bakk's response to the Journal's findings:

"All legislators were very troubled by the Wall Street Journal article," Senate Majority Leader Tom Bakk told reporters. "That is not the place -- the front page of the Wall Street Journal -- where we want our flagship university."...

Senator Bakk asked Kaler to report back to lawmakers by mid-March with some sort of blueprint for taming those administrative costs. He said he realized much of that hiring happened before Kaler arrived, but it still warranted action.

"The university's success at the legislature is dependent on how they react and how they respond to the criticisms," Bakk explained.

And the Pioneer Press details Kaler's response:

The University of Minnesota will hire an outside consultant to review its administrative structure and costs.

The decision was announced Friday, Jan. 11 -- days after U President Eric Kaler received a letter from two key DFL legislators [i.e., Bakk and Bonoff] calling for such a review...

In a news briefing outlining the university's legislative priorities, Kaler said bringing in someone to do the review will give it "external validation." He said he is not sure yet if the report's cost will reach the $50,000 threshold that would require bidding out the job...

At the briefing, Kaler pushed back against some of the criticism, saying a look at growing payroll costs must more fully account for rising student counts and research grants. By the U's latest count, it has added about 650 administrators over the past decade while enrollment increased by 9,000 students.

But he said, "I am not really interested in defending the status quo. I am interested in talking about how we'll get better going forward."

"(The university) is a jewel to the state of Minnesota, and I'm committed to running it as effectively and efficiently as I can," Kaler said.

In a Star Tribune op-ed published January 5, Kaler outlines a number of ways he's worked to bring down administrative costs and keep tuition affordable since he became president 18 months ago.

"We know there is much more work to do," Kaler wrote, adding that his efforts to control costs have been complicated by a $140 million reduction in state aid since 2008.

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