New job, same challenge: Former state budget chief works to solve $166M deficit at University of Minnesota

Myron Frans has experienced a sort of déjà vu since taking over as the University of Minnesota's chief financial officer in September.

The longtime state budget commissioner who served in the administrations of Gov. Mark Dayton and Gov. Tim Walz is advising a new chief executive, U President Joan Gabel, and facing the daunting, yet familiar challenge of solving a steep budget shortfall. The backdrop of his new job looks much different, however. Instead of deliberating at the State Capitol with the governor and lawmakers, Frans must make big budget decisions over Zoom meetings with U leaders, many of whom he has not yet met in person.

"I miss those one-off conversations and the face to face a lot," said the sunny and soft-spoken Frans. "It's hard to do this job without being there. … But we're getting it done."

Frans will be tasked with making tough financial decisions over the next year as the U grapples with an estimated $166 million deficit due to the COVID-19 pandemic. He will also oversee the university's investments and core operations such as campus health care and public safety. Already, Frans is facing pressure from regents to rein in administrative spending, and scrutiny from students who are calling for the U to consider diverting funding from its campus Police Department.

The former state budget czar is used to being at the center of charged spending debates. He often played peacemaker in high-stakes budget negotiations at the Capitol.

"That's exactly why we asked him to join us, because he has experience with this kind of deficit," Gabel said. "He came into arguably the most difficult financial circumstances a university could be in in the modern era."

Most of the U's deficit stems from pandemic-induced losses in athletics, parking and student housing and dining revenue, with fewer sporting events and lower residence hall occupancy.

Frans has helped craft a plan to address the deficit. He and other U leaders proposed taking out an $82 million loan to cover half the shortfall, with the rest covered by $50 million in university fund balances and $30 million in savings from employee furloughs and pay reductions. The Board of Regents will act on the budget plan early next year.

The loan would specifically be used to cover revenue losses in auxiliary services such as athletics and student housing. Those areas should rebound next fall if normal college life resumes, Frans said, and the revenue they generate would be used to pay back the debt.

Regent Michael Hsu is skeptical of the plan to borrow such a large sum. The university should more aggressively trim its personnel spending before taking out a loan, he said. The U has more than 27,000 employees, with salaries and benefits representing about two-thirds of the school's expenditures. As the new CFO, Frans should be leading the charge to cut costs, Hsu added.

"Manage administrative costs down. Freeze tuition or lower tuition. Get us out of this pandemic with the least amount of borrowing," Hsu said, ticking off his expectations for Frans.

Hsu pointed to Frans' salary as an example of the "bigger problem" of administrative costs at large universities. As the state's budget commissioner, Frans made around $155,000 annually. His U salary of $399,000 is more than twice as large, not counting an additional $50,000-$80,000 in deferred compensation he will receive in each of the next five years.

Frans replaced former Senior Vice President Brian Burnett, who made $432,000 annually. The U kept Burnett on as an adviser to the president through Dec. 21, paying him the same salary to help Frans transition into the role.

Over the next year, Frans said, he will review how the U sets administrator salaries and look for opportunities to consolidate services. The university is also seeking an outside consultant to help find savings.

"The president really wants us to look at over the next five to 10 years, how do we structure ourselves internally to reduce those costs?" Frans said.

Student leaders were initially tepid about the hire of Frans, not taking issue with him as a candidate but with the university bypassing the typical search process to select him.

In a letter to Gabel, student body President Amy Ma and others said they would have liked to question Frans about his approach to supervising the campus Police Department. Students have ramped up scrutiny on campus police since the death of George Floyd, with some calling for the department to be defunded and disarmed.

"He was mostly a tax attorney and then of course worked at the state of Minnesota," student senator James Farnsworth said of Frans, alluding to his lack of public safety experience.

Frans said he takes police accountability discussions seriously and noted the university has hired an outside consultant to examine the relationship between campus officers and the student body. He added that he will continue to consult students and faculty about important issues at the U.

"The consultative process here is really very vibrant, and I think critical," Frans said. "I've … done a lot of consulting with the faculty and staff and students. That's really enjoyable, not something I got to do a lot of at the state."