College of Continuing Education, Headliners

Thursday, January 10, 2013

Thank you, Dean Nichols. Congratulations on 100 years of great service and great teaching in our College of Continuing Education, and thank you for your leadership. I’m thrilled to kick off this season of the Headliners.

And I’m also quite happy to see one of my bosses here, Regent Rick Beeson. I have 12 Regent bosses and one spouse. Then, there are another 201 very close personal friends of mine over at the Legislature.

Do not worry. I am very well supervised.

Yes, the University and I have been in a lot of headlines recently. Often, it seems, those headlines are negative—about administrative costs or double-dipping professors or out-of-state tuition—you name it. I do take all of the headlines and the alleged facts behind them very seriously.

But I am thankful that I have a sixth sense. That sense attracts me naturally to thegood headlines. Yes, good headlines about the U exist, too.

Like earlier this week we announced we’d met all of the accountability measures that the Legislature mandated in 2011—lifting graduation rates and financial aid funding, among others. We were asked to meet three of five goals.

We exceeded all five.

Or the honor received last month by our College of Biological Sciences professor Daniel Voytas. His groundbreaking genetics work—conducted right here on our St. Paul campus—was selected by the journal, Science, as one of the world’s scientific “breakthroughs of the year.”

Or the role the Humphrey School played this week convening just about all of our friends at the Legislature on our Twin Cities campus on key issues. Our University of Minnesota-Rochester chancellor Steve Lehmkuhle represented us, and discussed the U and economic development. Steve is doing a marvelous job in Rochester building a truly unique campus and educational experience.

Or the five College of Liberal Arts students who, in their classroom, helped createsoftware apps in a variety of languages to aid in disaster relief around the globe.

Yes. For some reason, I’m driven to discover those headlines.

Amid all the news, and all the challenges we face, I hope we don’t lose sight of what a great university we have:

  • the spectacular students;
  • the world-class faculty;
  • the life-changing research; and
  • the incredible impact—economically and culturally—we have on this state.

I know many of you here are very active in civic affairs. I hope you won’t lose sight of our greatness.

Now, let me address head-on those headlines. They began with a lengthy story in the Wall Street Journal, which, on reflection, didn’t adequately illuminate all of the complexities of a large university like ours. In some ways it was deceptive, and certainly inaccurate.

The Journal piece then hit the news echo chamber with a pretty lazy Washington Post commentary that was reprinted by the Star Tribune op-ed page. I’m guessing that many of you have read those stories, or some of them, or heard about them. I know at least one of you did because earlier this week Dean Nichols received an email from you.

You asked a good question that I’m eager to answer. You wrote: 

As an old corporate type, I am itching to see organization charts and let someone explain why the same kinds of ratios applied to corporate org charts don't apply to academic institutions.

First, I want you to know that ever since I took office, I have been working hard to determine all of the spans and layers in our organization, and that work is being done as we speak. Over the years, we have been lax on that, and I’m taking our size and our job classifications head-on.

That’s all part of an overall initiative and process I’ve called Operational Excellence, and we’ve had many success stories on that front that I’ll detail in a few minutes.

But we are not a corporation. We are Minnesota’s only comprehensive and public research university:

  • with five campuses,
  • about 70,000 students,
  • more than 20,000 employees, and
  • more than 28 million square feet of real estate;
  • not to mention farms in St. Paul,
  • labs on the Iron Range, and
  • research boats on Lake Superior.

We all know the challenge in higher education today is to deliver excellence at an affordable price. To do that requires us to do more with less, and that means we have to be efficient and effective. At the same time, we have to be a place where ideas, and the people who have them, grow and thrive. That process is intrinsically messy and inefficient. Still, we do need to run our business side like a business.

For example, Senior Vice President for Academic Administration Robert Jones has left us to become the president of SUNY at Albany. And I eliminated his office and his position, saving about $1.6 million annually. Our foundations—which raised more than $244 million last year—are in the process of merging, so those two CEO positions will be combined. But we are a very big organization.

My senior leadership team is now down to 18, and after the foundation merger, it will be 17. But at Delta Airlines right now, their CEO has, according to their company directory, only 9 direct reports. At General Mills, their CEO has, I’m told, 10 direct reports.

Look at the organization of just one unit—our largest—which is called University Services. At University Services, we construct things, plow snow, cut grass, and deal with other major civic projects, such as a new light rail line that is going straight through our campus.

We manage facilities, one-quarter of which are 70 years or older. We must maintain a safe campus, so we have a 50-person police department, the size of the police department in Edina.

We believe in environmental sustainability, so we work hard on that as we:

  • recycle,
  • make our buildings more energy efficient, and
  • mothball some facilities.

Oh, and by the way, University Services also works to:

  • house 10,000 students,
  • feed our community 40,000 meals a day, and
  • run our bookstores.

Last time I checked, 3M, Medtronic, and General Mills don’t do that. And they don’t have a marching band, either!

And some of the work, oversight, and administration is not transferable across the organization. Maybe the easiest place to see this is in tech support. We provide everything:

  • from desktop support and running enterprise systems,
  • to managing curriculum delivery software,
  • to running some of the world’s largest supercomputers,
  • to maintaining various electronic library archives for the entire state.

You can’t just pick up the workers and managers of an MRI magnet and, say, move them to the large animal hospital or a residence hall.

On any given day on this Twin Cities campus, we’re probably the state’s sixth largest city. We have an $800 million research enterprise, with thousands of items to comply with from federal agencies, and the need for administrators to make sure we’re complying. We care for more than a half-million patients every year at our Academic Health Center.

Can we do better on administrative costs and Operational Excellence? Of course. We must. And we’re doing so every day.

Should we be held accountable to the legislature, and students and their families? And to Minnesota taxpayers?

We must be. And we are. 

We are putting students and families first by keeping tuition low and increasing financial aid.

My first budget last year proposed the lowest increase in a decade: 3.5 percent. This year, we're vigorously advocating for a two-year freeze for Minnesota undergraduates, through a renewed partnership with the state.

Our investment in financial aid for all students—excluding loans and employment—this year was $210 million, or about $60 million more than just five years ago. 

We are improving, growing, and becoming more productive despite deep cuts in state support.

We serve nearly 9,000 more students today than we did in 2000—an increase of nearly 16 percent. During that time, the number of employees has increased just 3 percent—a mark of our productivity.

After adjusting for inflation, the per capita cost of educating and graduating a student is 13 percent lower than it was in 1997.

Our research portfolio has increased by 40 percent over the past five years.

Private philanthropy has grown to record levels because our donors clearly believe the University is a sound investment.

We are in demand: A record 40,300 prospective students have applied for admission to our Twin Cities campus for 5,400 slots as our reputation and value have grown.

Most importantly, thanks in part to exceptional teaching, advising, and other student services, our graduation and freshmen retention rates are at their highest levels ever. And that helps to keep costs down for students and families.

We are also reforming how we do business and we have thoughtfully stopped doing some things.

It’s called Operational Excellence and we have a website, which I urge you to visit. There are many success stories.

  • Over the past two years, we've saved $13 million by modernizing our purchasing procedures.
  • We've saved $5.6 million over the past three years in energy costs by tuning up our buildings.
  • We consolidated libraries on our St. Paul campus, saving $130,000 annually.
  • We became one of the first universities in the nation to offer the entire suite of Google apps to faculty, staff, and students, and that’s valued at more than $15 million a year.
  • We closed two major administrative offices, saving $2.2 million a year.
  • We completed an external review of our Academic Health Center and are launching a strategic planning process in the Medical School.
  • We partnered with the Board of Regents and adopted new executive compensation policies and oversight.

I hope you get the point. We are working our tails off to keep costs down. And to drive our funds to the core mission of being an accessible and affordable great university. I am committed to it.

The Future

Let me turn to the future and what we might look like in a decade or two. Predicting the student body 10 years out is a bit problematic, but here is a stab at some changes we can expect.

We already have a plan in place to increase the number of Science, Technology, Engineering and Math (STEM) students in the College of Biological Sciences, the College of Science and Engineering, and the School of Nursing by 1,000 slots. That’s been under way the past two years. Given the economy and interest from students, parents, and employers in the sciences, we are anticipating the number of applications in these areas will continue to grow, at least for the next five years.

Liberal arts remain the key to being an undergraduate on our Twin Cities campus, and the College of Liberal Arts (CLA) continues to be our largest college. Our strength continues to be lifelong learning.

Employers continually tell us that students:

  • who can communicate and write well,
  • who can work in teams,
  • who can speak more than one language,
  • who are critical thinkers, and
  • who can work across cultures

are the kinds of young people they are seeking for jobs.

That’s what CLA does, and we have invested in it. This academic year, Dean Parente has been filling 23 faculty slots.

We have a plan in place to increase the number of out-of-state, non-reciprocity students—that is, not from Wisconsin. The topic of the in-state vs. out-of-state tuition differential is—of course—in the headlines, and we are examining that. But I’m sure we will maintain a resident Minnesota percentage of at least 60 percent, putting us in the mid-range of our Big Ten peers…all 14 of them!

This year, about 63 percent of our incoming students were Minnesota high school grads; but, when you take transfers into account among all four years, about 70 percent of all undergrads were Minnesotans.

Obviously, the State of Minnesota will also have a higher percentage of students-of-color, and I expect the U of M will also. That is why it is so important for this University and all key stakeholders—K through 12, the business community, and non-profits—to work together to help close the troublesome achievement gap in this state. That is the educational and aspirational gap between students of color and white students, and between low-income students and their middle- and upper-class peers.

As the demographics of Minnesota change, we must ensure that all children, regardless of economic background, are prepared for higher education and have access to the University.

Late last year, a broad coalition of organizations launched Generation Next, a coordinated effort to close the achievement gap. I’m the co-chair of Generation Next. I feel passionately about this important project and the effort we will need to succeed. We will bring our research and expertise to help tackle this profound challenge for our state and our University.

And, looking down the road, of course, there will be new uses for technology and teaching and learning. Provost Hanson, whose father once taught on this campus, is leading our initiative on eLearning. You’ll be hearing some decisions on that in the near future.

But I do not foresee the demise of the bricks and mortar University. Karen and I have two sons, and when they turned 18, all four of us were ready for them to leave the house, go to college, and learn about themselves amid other young people.

Biennial Budget Request

Finally, let me briefly walk you through our biennial budget request, which will be a topic of much discussion over the coming weeks with the opening of the Legislative session this week.

My priorities as president are reflected and embedded in this budget. It focuses on accessibility, affordability, and accountability. It focuses on emerging fields of research—in which we are already strong players and for which the state’s industry needs our expertise and curiosity.

Hold tuition constant

First, we take rising tuition and student debt head-on with a proposal to hold tuition constant. That is, we are proposing a zero percent increase for Minnesota resident undergrads.

We’re asking the state to support us with $14.2 million a year—out of a $37 billionstate budget—to keep this University affordable.

Here’s how things have changed. I’m an engineer, so let me draw a graph for you about Minnesota and higher ed funding.

Imagine an axis here that is the year 1999 to 2011. And this other axis is the amount of money per capita that states allocate to higher education.

For the United States, that number has declined about 23 percent, the consequence of political decisions and economic reality.

But in a Minnesota graph—in 1999, we were well above the national average, in the upper quartile, a place known for education, marking the Minnesota Miracle and the value we placed on education.

MN Higher Education Funding graph showing downward trend

Over that 12-year period, the decline in funding in Minnesota and for the U, wasn’t 23 percent, but 48 percent—putting us well below the national average of funding for students in higher education and headed toward the lower quartile with states like Mississippi and Louisiana.

Let’s put it another way: 15 years ago, you showed up with a dollar, the state showed up with two dollars, and that’s how your tuition was paid. Now, you show up with a dollar, and the state of Minnesota shows up with…just 50 cents.

That’s the shift of the cost onto students and their families.

If we could cap tuition for four years, that would add up to about $2,500 per student. That’s a lot of money for most students and their families.

About two-thirds of our students now graduate with debt, and that burden averages about $27,000. If would could keep tuition constant, that would mean a 10 percent reduction in debt.

We must keep this University affordable. It is my priority. It’s at the heart and soul of our legislative request.

Here are some other highlights, and we can dive into the details in the Q&A.

Operational Excellence

First, we tighten our belts. Again.

We reallocate $28 million in cost savings as part of that program we call Operational Excellence, which drives back office operations.

Zero percent tuition increase

We then propose a zero percent tuition increase—flat tuition for two years for Minnesota resident undergraduates.

The cost that we ask the state to share is $14.2 million in each year of the next two years. That’s $14 million a year on a state biennial budget of $37 billion. It’s not a big number at that scale.

But the difference it will make to students and their families is huge. In Twin Cities campus numbers, it would amount to about $2,500 during a student’s four years on campus. That’s a lot of money for most families.

The average debt for students with debt—is about $27,000. So, we would lower each student’s debt by about 10 percent, with a state investment.

Let me repeat our proposal: a zero percent tuition increase for Minnesota residents as we renew our partnership with the state.


In parallel, we are proposing a new way to invest in our research and innovation. We call it the Minnesota Discovery, Research and InnoVation Economy program, or MnDRIVE. We line up the U’s research strengths with the needs of the state and the support or emergence of new industries.

We’ve focused on four areas:

  • Robotics, which affect manufacturing in many of your counties
  • Food safety and production—about 20 percent of the state’s economy is food related
  • Environmental challenges—mostly water quality issues—posed by mining, agriculture and natural gas exploration
  • Critical issues around brain disorders, such as Alzheimer’s, epilepsy and addiction—which could be a needed boost to Minnesota’s medical device industry

We would fund MnDRIVE with a state investment of $18 million per year for the biennium. It will add faculty, research dollars, and enhanced partnerships with businesses across the state. It will leverage private research dollars.

Other policy initiatives

Also, and not a formal part of our budget, we suggest a collection of policy initiatives that can aid families or provide tuition relief for a student.

Among them: tuition relief if the student enters a health care profession and works in underserved areas, such as rural towns and inner cities.

Performance measures

Finally, we are prepared to put a part of our state allocation at risk.

In 2011, the legislature came to us with some mandated performance measures. They said if we met three out of five of their measures we’d receive one percent of our state allotment.

We announced earlier this week that we far exceeded their goals…and not just three out of five, but all five.

This legislative session, we’re the ones proposing five performance goals around:

  • graduation rates;
  • number of degrees we award;
  • increased financial aid to students;
  • maintaining our research engine; and
  • increasing our invention disclosures.

And if we don’t hit three of those goals, we will forfeit $11.5 million in state funding, or about 1 percent.

So, this request isn’t simply about what we want. This is about what we’re going to do for the state, for our students, and their families.

And here’s the historic context: If our request is fully funded for fiscal year 2015, we would receive $604 million from the state of Minnesota. That is exactly the number the state provided us in 2001—14 years ago!

Fourteen years:

  • of increased energy costs, infrastructure costs, technology costs;
  • of 16 percent more students;
  • of an enlarged research operation; and
  • 14 years of new technology.

We’re not asking for the moon. We’re seeking to continue to be the state’s economic and cultural gem.

I urge you to advocate for the U. We have a Support the U website, and there you can sign up and follow our progress through the Legislature.

I want to leave you with this message: We are a great university, we are changing, we are facing the real issues in higher education today, and we will continue to make you proud.

Thank you!