University of Minnesota to ask state for bump in support

University of Minnesota President Eric Kaler will ask for an almost 7 percent increase in state financial support for the U over two years — his final appeal to state lawmakers before he steps down next summer.

University officials told the Board of Regents Thursday that the additional money — $30 million more for the 2019-2020 academic year and $27 million the following year — would let the U offer more-competitive employee pay, better classrooms and research infrastructure and more. The U now receives $673 million a year from the state, or about 17 percent of its $3.8 billion budget — a portion that has steadily shrunk from almost 40 percent three decades ago.

"We believe this request is fiscally responsible and sensitive to the competing priorities for funding at the state level," said Brian Burnett, the U's senior vice president for finance and operations.

Last year, lawmakers in the Republican-controlled state House and Senate granted slightly more than a third of the U's request. The upcoming election will determine which party controls the legislative process, which could influence how much of the U's request is fulfilled next year.

The contract for Kaler, who is leaving the presidency next July, could be a factor. Faculty leaders on the university's Duluth campus and a state legislator voiced concern this week that the final compensation package for Kaler approved this summer could hamper the U's lobbying push.

In a recent letter to the regents, Sen. John Marty, DFL-Roseville, called the decision to give Kaler his full salary of $625,250 and an added pension contribution of $325,000 in the year after he leaves "outrageous."

"The university needs the money, and I very much hope it gets it," Marty said. "But when you have a president making close to a million dollars coming in and asking for more money, that's a harder sell."

In a presentation to the Board of Regents, U officials noted that even as the Legislature has chipped in more in recent years amid a resurgent state economy, funding for the U has not yet rebounded to a pre-Great Recession high of $709 million.

U officials said that the nine funding hikes that lawmakers backed for the U since 1996 average about 9 percent. In that context, they said, the latest ask of 6.7 percent is reasonable. Kaler touted administrative cost cuts made during his tenure.

The U projects that its costs will jump by $201 million during 2019-2021, including $80 million more in employee compensation. Under Kaler's plan, more than half of that amount would come from tuition, shifting of existing resources or other revenue. The rest would come from the state.

Officials said a top priority is compensation for faculty and staff as the U faces global competition for talent.

"Our most valuable resource is our people, and we need to invest in our people," Burnett said.

Regents did not object to the size of Kaler's request, but some suggested a more strategic approach to lobbying lawmakers. Regent Darrin Rosha said he wants to see a more detailed accounting of where the extra money would go.

"To make the case, we need to give them clarity on how the money will be spent," he said. "My great concern is that we're still not giving enough clarity to the legislators."

This week, Scott Laderman, the president of the University of Minnesota Duluth faculty union, and Rebecca de Souza, UMD faculty senate chair, wrote the Board of Regents to decry Kaler's final pay package, which regents approved this summer. Calling it a "golden parachute," they argued the agreement will complicate the U's pitch for more state money and send a demoralizing message to employees and students.

Marty said he is worried the agreement with Kaler might once again make administrative pay an issue at the Legislature. He wants the university to look for a new top leader willing to accept more modest pay, which he said would signal genuine dedication to the future of the institution.

But Rep. Bud Nornes, R-Fergus Falls, who chairs the House higher education committee, said he doesn't expect Kaler's pay will become a major issue.

Mila Koumpilova • 612-673-4781