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Kaler budget proposes another $20 million in administrative savings

Regents act on light rail service agreement

May 9, 2014

University of Minnesota President Eric Kaler has recommended more than $20 million in administrative savings in the next year. Combined with FY14 reductions of more than $15 million, the FY15 cuts would bring the University nearly $36 million toward Kaler’s commitment to cut $90 million by FY19.

The University’s Board of Regents reviewed Kaler’s recommendations as part of his proposed budget during this week’s Board meetings. Regents also took public comments.

Proposed FY15 savings include reducing an estimated 115 positions (mostly through attrition), restructuring units, improving purchasing processes and decisions, and other initiatives to redirect dollars from administrative costs to core mission activities of teaching, research and engagement.

Since his first day in office, Kaler has been committed to Operational Excellence — changing the U’s culture in order to work smarter, reduce costs, remove barriers, enhance services and increase revenues.

A bedrock of future Operational Excellence success will be The Enterprise Systems Upgrade Program (ESUP), which will upgrade large-scale hardware and software applications that are nearly 20 years old and support University business processes, the flow of information, reporting and data analytics. On track to launch in early 2015, ESUP’s technical platform will create efficiencies by simplifying, streamlining and integrating services such as course registration, student services, HR, payroll and more. It will also help the University become more nimble and responsive, with more accessible and usable data to better understand business practices.

Ongoing Operational Excellence efforts are showing success. Examples include:

  • Human Resources. Simplifying and streamlining all HR processes and systems, including the University’s classification and compensation system and the Human Resource Management System (HRMS), which will create more efficient HR operations and improve data quality. In addition, it will allow the University to electronically manage time and absence reporting and approvals. Estimated annual cost savings associated with the HRMS Upgrade: $367,000. Estimated annual cost avoidance: $200,000.
  • Information Technology. Continued consolidation and standardization of server hosting, email and help desk functions so resources can be redirected to academic functions. A conservative estimate on the replacement costs for the suite of Google Applications such as Gmail and Google docs is $15M/year.
  • Finance and Procurement. Consolidating travel management authority and fully automated processing by 2016; creating U Market, a one stop shop for supply purchases that saves more than $8 million annually; implementing a contract management solution.
  • Shared Services. Organizing delivery of administrative functions into, unique service-oriented entities. Example: Just 33 employees in the Pediatrics and Ob/GYN Administrative Center serve 22 units and more than 1,000 faculty and staff with space management, finance and accounting, grants management, HR, payroll and more.

“It’s clear that President Kaler’s focus on reducing costs is working,” said Board of Regents Chair Richard Beeson. “This proposed budget shows his administration’s continued focus, which the Board fully supports and believes will allow this great institution to best deliver on its mission.”

Freezing tuition, investing in academic excellence
For the second time in two years, Kaler’s proposed budget maintains the tuition freeze for undergraduate resident students on all campuses that was first implemented in FY14. The freeze was made possible by a partnership between the U and the state legislature. Policymakers invested $42 million in the biennium to freeze tuition for two years, which was part of the first increase in state support in six years.

Professional resident and non resident students in the Medical School and Veterinary Medicine will also see a tuition freeze in FY15.

Freezing campus and collegiate fees for the second straight year is also part of Kaler’s proposed budget.

Overall, the recommended budget holds the combined total of all resident undergraduate tuition, required fees and room and board across all campuses to a 1.2 percent increase or less.  

Undergraduate non-resident tuition rates on the Twin Cities campus would increase as part of a strategic decision to slowly broaden the gap between resident and non-resident rates. As the U of M’s national reputation grows, the U is creating a non-resident tuition model that more closely resembles our peers. Current non-residents still benefit from one of the lowest tuition rates among peer campuses. Some graduate and professional students will see a modest tuition increase, consistent with peer institutions and the market.

Kaler also recommends $23.4 million for academic investments: faculty hires, classroom and lab upgrades, instructional and student support and academic support improvements, as well as $15 million toward a merit-based compensation pool increase of 2.5 percent to retain and recruit world-class faculty and staff.

“This proposed budget reflects my commitment to keep the University of Minnesota accessible and affordable to all qualified students and families,” said Kaler. “In fact, our financial aid packages make the U the most affordable four-year college in the state for families making less than $30,000 per year. That’s something we can be proud of.”

The Board heard from more than 20 members of the University community and public at a budget forum following today’s meeting. The Board will take final action on the budget at its June meeting.

Light rail service to begin in June
Regents authorized the University’s administration to sign an operations and maintenance addendum to the September 2010 Agreement with the Metropolitan Council, Hennepin County and the City of Minneapolis, allowing Metro Transit Green Line service through campus to begin June 14. The Green Line includes stops on the West Bank, East Bank and Stadium Village.

Protecting research and infrastructure from vibration and electromagnetic interference (EMI) along Washington Avenue remains a goal for all parties involved. The agreed to performance standards for vibration and EMI have been met through construction solutions (use of ‘floating slab tracks’) and operational changes (slower train speeds and maintaining consistent speed across the Washington Avenue bridge). The University has agreed to relax certain vibration standards for one year at Kolthoff Hall, which sits on the East Bank near the Washington Avenue bridge and his home to important research labs. Additional testing will be conducted during this period to ensure no negative impacts to research.

The Board also considered:

  • Transfer student initiatives. Vice Provost and Dean of Undergraduate Education Robert McMaster outlined recent initiatives to support the U’s more than 3,000 transfer students annually, such as Transfer Welcome Days, increased placement of transfer students in on-campus residence halls, creating a Transfer Coordinator position in the Office of Admissions and developing transfer.umn.edu. The U’s transfer students primarily come from local community colleges, as well as Minnesota State Mankato, St. Cloud State, University of St. Thomas and University of Wisconsin Eau Claire. The University continues to partner with those schools, as well as others, to make transferring a seamless process that undergirds student success.
  • Protecting and improving facilities. Regents reviewed the U’s proposed FY15 capital improvement budget, which authorizes $367.8 million in projects to begin design or construction. The Board will take action in June.
  • Pioneering health research. In his first Board presentation, Dean of the Medical School and Vice President for Health Sciences Dr. Brooks Jackson discussed the University’s global leadership in health sciences research. Jackson, and five Academic Health Center professors on the leading edge of their respective disciplines, described ongoing research efforts and the growing challenge of securing research funding despite federal budget cuts.
  • Providing a memorable student experience. In the third of three conversations about University Services’ strategic planning, Vice President Pamela Wheelock led a discussion on how University facilities can foster a positive, memorable student experience on the Twin Cities campus. UMTC’s urban environment — with 250 buildings and 13.5 million assignable square feet in the country’s 16th largest metropolitan area — has long been an attraction for students. Wheelock explored ways UMTC is working to remain competitive as students’ “basic needs” change and the city adjacent to campus shifts.
  • A transit-friendly University. With more than 80,000 people travelling to the Twin Cities campus on a typical day, the University is committed to working with state, regional and local partners to provide a comprehensive transportation system. Wheelock discussed integrating these systems to ensure safety, ease accessibility and reduce congestion especially as UMTC evolves from a commuter campus to one where an increasing number of students live on or near campus.
  • Promoting the best and brightest. The Board approved recommendations for promotion and tenure of more than 180 University faculty.

See President Kaler's report to the Board.

The Board will meet again June 13-14. For more, go to regents.umn.edu.

Twin Cities Campus: