Testimony to the House Committee on Higher Education Policy and Finance

Thursday, February 16, 2012

Mister Chairman, Committee Members,

Good afternoon. I am Eric Kaler, the proud 16th president of the University of Minnesota.

I am accompanied here today by Linda Cohen, the chair of our Board of Regents, and her colleagues, Regents Rick Beeson and Maureen Ramirez.

I’d like to introduce to you the new Vice President for Academic Affairs and Provost of the University, Karen Hanson. Provost Hanson recently came to us from Indiana University. Like me, she is a graduate of the U.

I am thankful for this opportunity to share with you my vision for the University. I am passionate about public higher education and how it can transform the lives of students, and the economy and culture of this great state.

I first came to the University in September of 1978. I was about to be 22 years old and a graduate student in the best chemical engineering program in the world. I had a fellowship—financial aid—to support me, which was the only way this son of a working class family could go to graduate school.

That was my first encounter with the excellence of this University, and with the mission and public support that made it accessible to me.

I was determined then to become the youngest senior vice president of a Fortune 500 company. But in my third year as a graduate student I was asked to teach a class.

The rest is history. I loved the classroom, the students, the research. I loved public higher education and the mission of the nation’s land grant universities—of which we are one: a commitment to teaching, to research and to engagement with our communities.

I loved the University of Minnesota, then and now. But its two essential pillars—of excellence and access—are, I believe, at risk. They are at risk because of a continued decline in state support for the University.

We are and want to continue to be:

  • Excellent and world class
  • Accessible to qualified students from all economic backgrounds
  • A leader in science, technology, engineering and math education in this state, nation and world
  • A center for medicine and the health sciences
  • A place where the liberal arts are valued
  • A vibrant academic and diverse cultural community that changes lives, and catapults people with a passion to successful careers, and to become leaders
  • An engine for job creation in the state of Minnesota


As state funding has declined—and we all understand why it has declined—we have had to raise tuition to cover some of that shortfall and to maintain the excellence required to prepare our students to be successful in the competitive global jobs marketplace.

If you would like to hear them, I can detail the many consequences to this loss in state funding. We have managed, but the status quo is far from stable. This rise in tuition has come as University leaders have made our $3.7 billion organization, with about 25,000 employees, much more efficient.

When I was student here nearly 35 years ago, not only was my hair longer, but the legislature’s and governor’s support for the University was stronger. The state then supported about 43 percent of the University’s operating budget.

Today, state support is approximately 18 percent,

  • even though our graduation rates are drastically improving, and
  • we have been faced with an increase in the same cost drivers as most large businesses:
    • health care costs,
    • the burden of caring for a stock of very old buildings,
    • the energy costs of those buildings,
    • a proliferation of technology in all its forms, and
    • increased financial aid for students.

We must maintain our excellence and access, and ensure that students go on to complete their degrees. We must make the University more affordable. We must reduce our students’ debt.

Mister chairman, members of the committee: Let’s think together about some of Minnesota’s most pressing challenges today.

  • There is the educational achievement gap in our K-12 system, and the changing face of our state as we become increasingly diverse.
  • There is a decline in our manufacturing base, and there is the need to create a thoughtful, well-prepared workforce to lead this state.
  • There is the struggle to control health care costs as our population ages, and as we battle epidemics like diabetes and heart disease.

And then I ask: What are the opportunities in this state…what with our abundance of Fortune 500 companies, and a proud history of tackling tough problems head on?

I believe the University of Minnesota is the major answer for the state. We stand at that intersection of challenge and opportunity. We stand ready, willing and able to use our resources and talent to partner with you and other key stakeholders to develop real, meaningful and lasting solutions to keep this state great.


Let me outline my priorities—my commitments—as president to achieve excellence and access, and to drive economic impact.

I want to re-invigorate:

  • The University’s Teaching and learning
  • Our undergraduate experience
  • Our rigorous graduate environment
  • And our world-class research enterprise

I want to re-imagine:

  • Our internal operations and functions, contain costs, reduce red tape, be more entrepreneurial, and see our University pick up its pace.

I want to champion to the people of this state:

  • The economic value of research we perform, the degrees we grant, and the employees we produce for 21st century jobs.

I want to strengthen:

  • Our business, philanthropic and community partnerships to work together to strategically address our state’s needs.

I want to unleash:

  • Our entrepreneurial spirit, reaching globally even as we serve and engage our local communities.
  • In this regard, I will be speaking more about our pioneering technology transfer and intellectual property program later.

I also want to lead

  • Our campuses and state to understand that access and diversity is critical to achieving excellence and maintaining Minnesota’s robust economy.


Mister Chairman, before I continue to outline my vision for the University of Minnesota, it is critical that you know where the University stands today, and its deep and wide impact and value.

The health and prosperity of the University of Minnesota is directly linked to the health and prosperity of our state. But it is also linked to the prosperity of your legislative districts.

For instance, Mister chairman:

I am pleased that 176 students from your district now attend one of our five campuses.

  • And that 892 U alumni live in House District 10A.
  • Those alumni have earned a total of 1,116 University of Minnesota degrees, including advanced degrees in such areas as medicine, law, and engineering.
  • In your district, the University has one of its six regional Area Health Education Centers.
  • Plus we have seven medical, nursing and pharmacy affiliation agreements in your district.

To all of you on this committee: Combined, your 15 House districts have more than 4,400 students attending one of our campuses. Your districts include about 900 University employees, and nearly 23,000 alumni who have earned more than 29,000 degrees. Those jobs and degrees have led to enhanced lives, enhanced salaries and increased tax dollars for this state. And in your districts you have numerous health care affiliation agreements, Extension offices, and labs and research centers.

We supply to your districts and the state all the pharmacists, dentists and veterinarians who graduate in Minnesota. Eighty-five percent of all those people who earn M.D.s are U grads. More than half of all health care professionals get their degrees from the U.

In one example of combining the elements of economic development, community engagement, health care delivery, statewide impact and diversity, the University of Minnesota graduates the second-largest number of American Indian physicians in the United States, a great number of whom started at our Medical School campus in Duluth. Plus our Twin Cities Medical School campus sends medical residents across the state.

Our footprint is statewide.


I’d like to turn now to the power of our distinct and unique role as the state’s only public research university, driving discoveries, cures, new products and scientific breakthroughs.

Our faculty and researchers have won grants of more than $1.5 billion over the last two years to cure and discover. Those grants were awarded in a highly competitive, nationwide grant market against thousands of other scientists and scholars.

We are ranked eighth nationally among all public research universities in external funding from agencies like the National Institutes of Health and the National Science Foundation…but we’re the 21st most populous state. We fight above our weight.

Sometimes the notion of a “research university” is difficult for people to get their arms around. I hope you saw the terrific article in Sunday’s Star Tribune about our Professor Karen Ashe who is leading the world in seeking a cause and cure for Alzheimer’s disease.

We’ve placed a copy of the article in your packets.

This is what a public research university is, and this is what we—and we alone in Minnesota—do!

Certainly, we are proud of past accomplishments by our faculty and researchers.

The University of Minnesota was there when taconite was developed, pacemakers were invented, and anti-AIDS drugs were created.

But in this world of “what have you done for us lately?”—and in an environment of scarce resources—it is important for us to show you what your return on investment is right now.

Here are just a few highlights of what we are currently working on at the University.

At our Academic Health Center, in addition to Alzheimer’s research, our faculty, students, and researchers are on the verge of major breakthroughs in cancer, diabetes, and childhood illness cures and treatments.

Using the resources you gave us—leveraged with large amounts of private funding and federal dollars—we are aimed squarely at the most urgent problem facing this state and nation: spiraling health care costs. That answer is not rationing or cutbacks on care. That answer is cures, treatments and preventions that we’re working on right now at the University of Minnesota.

In our College of Food, Agricultural and Natural Resource Sciences, we are an international leader in studying and combatting the global challenge of Ug 99 wheat rust, which could affect the world’s food supply.

Our School of Public Health in the Twin Cities and our Natural Resources Research Institute on our Duluth campus are partnering to study the high levels of lung disease among taconite industry workers on the Iron Range.

At our Carlson School of Management—where 97 percent of our MBAs get jobs soon after graduating, the highest rate of any business school in the nation—researchers are studying how and why our relatively small state has developed, attracted and maintained more Fortune 500 companies than states twice our size.

At our College of Education and Human Development, researchers are working with more than 300 Minnesota National Guard families, aiding in parenting resources and studying the lingering effects of parents’ military deployment.

In our College of Science and Engineering, a research team has developed a brain-to-computer process that is breaking new ground in allowing people with spinal cord injuries to harness their thoughts and control some activities.

Our School of Nursing is a national trailblazer in developing standards in the burgeoning field of electronic health records.

Undergraduates in our College of Biological Science are studying and mapping the DNA of life of the Mississippi River, a project that will have an impact for all of us who live near and use the nation’s great river for commerce.

That is less than 1 percent of the stories that I could tell. But that’s what a public research university does, and we are this state’s only one.

Those projects and hundreds of others allow for unique teaching and learning opportunities. They allow us to engage with different kinds of communities—urban and rural—across the state and globe. They strengthen our partnerships with the business community. With these projects, the entrepreneurial spirit of our faculty, staff, and students is unleashed.

Now, of course, not everything we do is quantifiable. Not everything employers desire is taught in a lab or with a spreadsheet. We are the state’s higher education leader in the liberal arts, too. Our College of Liberal Arts is the largest on our Twin Cities campus, and our Morris campus is nationally known for its liberal arts excellence.

Our overarching responsibility is to educate students for life. We teach and produce leaders who write and communicate clearly, work well in teams, understand the value of the arts, and whose curiosity and creativity help solve our most vexing problems in their communities and at their jobs. These students are central to creating the workforce for tomorrow—and the day after.

I am always delighted to recount the story of the winner of 2011 Minnesota Cup Entrepreneur of the Year. She is a marketing expert. She is a graduate of our College of Liberal Arts. And, much to Garrison Keillor’s joy, this entrepreneur was an English major.


The University may be open for discovery and for business, but our most important business is taking our state’s most ambitious and creative young people and allowing them to discover on their own.

As the state’s only public research university, we provide special opportunities for a student like Sam Schreiner, a senior from Lino Lakes. First, he’s an enthusiastic tuba player in our great Pride of Minnesota marching band. Second, in the physics classroom and lab, he evaluates satellite data. Third, he has studied abroad in China. Fourth, he has been named a prestigious Astronaut Scholar by a jury of former astronauts.

Yes, Sam’s mother can claim that her son is already a rocket scientist!

But here’s what I really want you to know: During his time at the U, Sam has received no fewer than nine scholarships—seven for engineering and two for marching band.

All because of the philanthropy that aids our students who have seen their tuition rise dramatically over the past decade. Right now, three-quarters of our students receive some kind of financial aid. And, like Sam, 14,000 of our students rely on some private philanthropy for their aid.

Sam represents

  • the power of our science and technology education,
  • the range of a liberal arts education that promotes his love of music,
  • a global perspective,
  • the access provided by financial aid, and
  • the excellence in all that he does and all that we offer him.


But what does innovative teaching, groundbreaking research and active community engagement mean for the state’s economy and for jobs?

Let me tell you.

  • We generate $8.6 billion a year in state economic impact, and support 70,000 jobs statewide, much of that due to our research enterprise.
  • For every dollar the state invests in us, we drive a return of $13.20 into the state economy—13 to 1 return on investment.
  • More than two-thirds of our students are Minnesotans who become top-notch employees of the future.
  • And those students who come from elsewhere often stay in Minnesota, developing businesses of their own.
  • A 2006 survey by the University’s Alumni Association found that U alumni had started nearly 10,000 companies in Minnesota, some in districts you represent.
  • Of those company founders, 2,300 of them had first moved here to attend the U.
  • Almost more than any other institution in the state, we are a talent magnet, bringing human capital to our state as the world’s business is increasingly international.
  • We generate patents and transfer our technology into the marketplace, creating much-needed and high-wage jobs.
  • We have 500,000 alumni around the world, spreading the University of Minnesota brand, elevating the reputation of this great state.


I have told you my story. I have detailed the power and range of Minnesota’s only public research university, and showed you the value and jobs we bring to the state.

Now, let me tell you where we are headed.

First, teaching and learning. We are responding to the demand from students and parents and from employers as we increase enrollment in key departments and colleges. Over the next three years, we will add 1,000 undergraduate slots in the so-called STEM disciplines—science, technology, engineering and math—and also in nursing.

In my vision, we will step up our game in those academic areas. There is great opportunity. This nation and state are falling behind the rest of the world in producing world-class scientists.

Last year, fewer than 32 percent of American students scored proficient in a worldwide standardized science test. In Minnesota, we’re a bit better, but not much; only 48 percent of our students in fifth grade, eighth grade, and high school were proficient in science.

We at the University of Minnesota can be—should be—leaders in producing first-rate scientists for our state and nation.

Also, we can be—should be—leaders in the most rigorous and thoughtful uses of distance learning. Our Crookston campus is already considered a national leader, and I would like to see us fine-tune and expand our distance and e-learning offerings.

We must promote interdisciplinary opportunities for the classroom and the lab.. That’s why our Biomedical Discovery District on our Twin Cities campus is so important, and why I am so very grateful that the legislature has been such a critical partner with us in helping to fund that exciting complex on our Twin Cities campus.

That Discovery District is a true crossroads, where scientists and social scientists, physicians and veterinarians meet, teaching and discovering.

Our new Physics and Nanotechnology Building, which the legislature also helped fund, will be a center for interdisciplinary work, too—some of it leading to major innovations in manufacturing processes.

This leads me to the University’s commitment to operational excellence and our stepped-up entrepreneurial spirit. Let me tell you about our new, first-in-the-nation Minnesota Innovations Partnerships initiative, or MN-IP.

MN-IP will more easily move the discoveries and intellectual property of our scientists and engineers into the market place. In years past, there often was much negotiating between the U and private industry over moving our important intellectual property off the shelf and out the door to benefit society and Minnesota business. Those negotiations have often ended with us getting 100 percent of nothing as industry walked away.

With MN-IP, that process will be speeded up tremendously without negatively affecting the University’s ability to profit from any major discoveries our faculty and researchers develop.

The main point: I want this University to move from a default mode of “No, can’t do it, never have done it that way,” to a more entrepreneurial mode of, “Yes, let’s take a risk, let’s give it a try, let’s succeed together.”

Meanwhile, I recently charged all of the senior leaders in the University to conduct what we call a “risk recalibration” examination, to eliminate or rethink all kinds of unnecessary and redundant policies and procedures.

Just as you here at the legislature are seeking to redesign how you do your business, we are pushing all of our hundreds of separate academic and business units to reduce paperwork, pay vendors electronically and centralize accounts-receivable activity. It may sound elementary, but for the U it’s new and could save us millions of dollars.

And, of course, we must better align the University of Minnesota with the MnSCU system. The U’s and MnSCU’s missions are different, but we share a commitment to quality and service.

Together, we must reduce our operating costs—perhaps through joint purchasing or shared services. But you should know, the U and MnSCU already partner in 200 different programs.


Let me turn to our important community and business partnerships. In many ways, the mission and reason for being of our University campus in Rochester is to be a part of one of the nation’s most vibrant health sciences communities.

Our partnership with the Mayo Clinic in all we do in teaching and learning in Rochester is groundbreaking, and I want to see that grow. Our partnership with Mayo on cancer research and now with our Decade of Discovery initiative to cure diabetes enhances our brand as a world leader in medical breakthroughs.

Meanwhile, in northeastern Minnesota, we are engaged in the critical and pressing issue of the future of the state’s mining and iron ore industry. This is an industry that this University has long supported with its science and its resources.

Right now, as the industry revives itself, there are real environmental concerns being expressed by state and federal government agencies, and Native American tribes. Our scientists, both on our Twin Cities and Duluth campuses, are working hard to produce reliable scientific data in this important matter.

The University is committed to lend our resources to find innovative ways—through technology and discovery—to help, as best we can, resolve the issues facing the state’s mining industry. Sometimes, world-class scientific work doesn’t occur as quickly as we all want. But we’re committed to perform our work as quickly as we can without compromising any result.

That is one of my visions: That, as the state’s only public research university, we remain a key player and convener in tackling the state’s most pressing problems.


Mister Chairman, members of the committee, before I close, I must emphasize this: We are at a pivotal point, perhaps a tipping point. This state has been disinvesting in the University—and higher education, in general—in recent years. And there is a direct correlation between state support for this University and the rise in tuition.

As state support declines, tuition increases. And that reality has occurred even as this University has become dramatically more efficient in teaching our undergraduates.

Over the past decade, we have seen a decline in the per capita revenue from state funds and tuition we receive to educate a student. Adjusted for inflation that decline is about 12 percent per student. So, we are more efficient in teaching and graduating students—the state’s best students—than we’ve ever been despite a decrease in state funding and support.

Mister chairman, members of the committee, I would like to remind you of our shared responsibility. We are partners to make higher education in Minnesota the best it can be to ensure student success.

Looking into our future, understanding my vision, I want to make this offer: If you will re-engage with the University of Minnesota, I will pledge to minimize tuition increases so that we—together—can move this great institution forward to drive the economy of this state.

We must be strong to fulfill my vision of a University that is

  • excellent;
  • accessible to qualified students of all economic backgrounds;
  • that is bold, risk-taking, and committed to operational excellence and efficiency;
  • creative in its teaching of undergraduates; and
  • that is attractive to graduate students from around the world who are driven to discover.

A University that is

  • infused with a sense of civic responsibility,
  • filled with curiosity, and
  • that understands that diversity is critical to achieving excellence in the classroom and on the job.

This vision of the future of the University of Minnesota may be mine today, but it is not about me. It is about our 69,000 students in Crookston, Duluth, Morris, Rochester, and the Twin Cities; about our faculty who are training and inspiring them; and about our researchers who are poised to change the world.

Mister chair, members of the committee, I realize some of you might not believe, as I do, in the power of the liberal arts. And, while I can show you all that we do, some of you might think we’ve turned our back on agriculture. And maybe some others believe that, despite all the engineers we train, the University can’t reinvigorate the state’s manufacturing sector.

Okay, but on this following fact I respectfully submit there can be no dispute: For every dollar you and the governor invest in the University of Minnesota, we return $13.20 to the state’s economy.

Some have asked for a detailed statement of the damage caused by the reduction of our state allocation by $140 million over the past three years. We have pages of details—open faculty positions, larger class sizes, layoffs of staff, and many other consequences for students and their families, and our employees and their families.

But, in the end, $140 million translates into an annual negative impact on the state’s economy of more than $1.8 billion. That’s $1.8 billion of lost economic activity every year. The University of Minnesota is a machine that multiplies every one of your dollars 13 times over.

That attests to the great investment that we are—and the profound value we bring—to this state and your districts.

Mister chairman, members of the committee—Thank you.