Can U find new funding sources?

After a year of work, a U of M task force outlines cuts and opportunities to stave off a huge budget shortfall.

By JENNA ROSS, Star Tribune

Last update: October 8, 2009 - 9:56 PM

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The University of Minnesota will need to make tough cuts to programs, raise tuition and outsource work to prevent what could be a $50 million budget shortfall by 2012, according to a report released Thursday.

Those strategies are among many made by a yearlong task force of top university officials charged with holding the U's financial future together despite "dramatic and permanent" reductions in state funding.

"It is about money, but for me it is about more than money," President Robert Bruininks told the regents during a workshop session Thursday. Any changes can't sacrifice quality, he said: "We have to protect the future of this great university."

State funding was once the university's largest source of revenue, but it now accounts for only a fifth of its operating budget, less than it earns from tuition. The report urges the U to push for more state funding but focuses on other strategies, including private giving, royalties off of intellectual property and real estate income.

Tuition is the biggest and best source for revenue, the report finds, "but we likely cannot sustain the high rates of growth in the last decade." Tuition at the coordinate campuses, in particular, is "already priced beyond market."

Increases in tuition would also come with increased aid for families that need it.

Adding 2,000 undergrads "would have a modest impact on the gap between projected revenues and expenses," the report finds, because of financial aid and other costs would dampen tuition revenues.

The report also urges cuts, arguing that the U needs to "narrow the scope of its mission," cutting programs and outsourcing work. It doesn't say where those cuts might come.

"Every unit must identify what it will stop doing," the report reads, "even if this means eliminating some things that universities typically do and that the University of Minnesota has been doing for decades."

Left unchecked, the university's rising operating costs -- including financial aid for students, health insurance for employees and "appetite for investments" -- will lead to a $1.1 billion shortfall by 2025, the report says.

The Associated Press contributed to this report. Jenna Ross • 612-673-7168