U undergrad tuition up 3.5%

  • Article by: JENNA ROSS , Star Tribune
  • Updated: June 8, 2012 - 11:36 PM

Regents OK'd a $3.5 billion budget that includes a 2.5 percent raise for most employees, 100 new faculty hires and new merit-based aid.

The University of Minnesota regents approved President Eric Kaler's first operating budget Friday -- a plan that contains a 3.5 percent tuition increase for undergraduates, about 100 new faculty hires, a 2.5 percent raise for most employees, and one tweak that earned him a unanimous vote.

Next year, an undergraduate student on the Twin Cities campus will pay $13,309 in tuition and fees. With room and board, the total comes to $21,309. Nonresidents and graduate students will see a 4 percent increase, while first-year, in-state law students will pay 6 percent more.

The $3.5 billion budget also bankrolls a smattering of projects, including $2.8 million for new "merit-based" scholarships, $3 million for research infrastructure and $1.4 million to fund ideas that will increase the university's efficiency.

Kaler's toughest "aye" might have come from Regent Laura Brod, who thanked Kaler for consulting with, rather than "force-feeding," the regents. "You got me to do something I wasn't sure I was going to do this year," she said, "which was vote for a budget." Last year, her first on the board, she voted against the budget.

Brod pushed back on a proposed 10.4 percent tuition increase for new, in-state students in the daytime MBA program. In response, Kaler sliced it in half, to 4.8 percent.

Kaler said that his budget shows he's "determined to put a lid on tuition increases." The 3.5 percent increase for in-state undergraduates will be the smallest percentage rise in 12 years, according to the U's Office of Institutional Research.

In total, tuition increases will add $24.6 million to the U's revenue. The salary bump for all employee groups will cost an additional $15.6 million. Overall spending will increase 1.5 percent compared to this year.

Support for new policies

At Friday's meeting, the board welcomed rules that would give regents more say on executive compensation and separation packages.

The new policies require written approval from the board chair and vice chair for "any significant change" in employment terms or deviations from severance or sabbatical policies.

Such policies now make clear that, for example, "an individual who does not return from a leave ... must reimburse the University for all or a prorated amount of the salary, retirement contributions, and value of benefits received during the leave."

A special committee of the board drafted the new policies after the Star Tribune reported that former president Robert Bruininks granted his departing executives $2.8 million in paid leaves and severance packages. He regularly approved lengthy leaves at administrative salaries, that report showed, and repeatedly waived a university policy that executives repay their stipends if they left the U.

"We've been mindful of not overreacting or under-reacting to the situation at hand," Regent Richard Beeson told the board. Beeson, the committee's chairman, said he hopes the policies will still allow the president enough authority and flexibility to hire, retain and release senior leaders.

Regent Patricia Simmons asked Kaler whether this new process "in any way hampers our recruitment?"

"I think we'll have to see, frankly," Kaler said. "If it becomes cumbersome or non-responsive, then we will lose candidates."

But if the board leaders move quickly, it shouldn't be an issue, he said.

"I personally think that if ensuring the public trust in this institution means we lose somebody, one or two, I'm OK with that," Brod said. "The short-term need of one or two individuals is less important than the long-term public trust in this institution."

Kaler agreed. The regents will finalize their support for the new rules at a meeting in July. Simmons called for a review of how the new policies are working a year out.

A long-term look

Before approving this budget, the regents reviewed a new tool that forecasts several budgets into the future.

To start, it assumes no tuition increases, a slight decline in state support and increases to employee compensation. With those and other assumptions, the university's expenses will outpace revenues by about $74 million in the first year, a gap that then grows.

The university will always balance its budget, said Richard Pfutzenreuter, chief financial officer. But this tool shows regents the size of the problem, allowing them to play with different ways of solving it.

In a Thursday meeting, Regent John Frobenius pointed out that a 1 percent tuition increase brings in about $8 million in revenue. So even with a 3 or 4 percent tuition increase, two-thirds of the gap remains, he said. "That's the problem that this starts to give us the framework to deal with."

Jenna Ross • 612-673-7168

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