The University of Minnesota must do more to cut costs

Opinion editor's note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.

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Last fall, University of Minnesota officials expected to request a $205 million two-year funding increase from the state, largely to cover costs of inflation, public safety and financial aid. Now, with some of its financial projections worsening, the U is asking for even more than that 15% boost.

U officials recently asked for an additional $97.5 million over two years to cover an unexpectedly significant drop in enrollment and a proposed tuition freeze. That brings the U's total request to nearly $1.7 billion to cover its general operations. (Separately, the U is asking for $950 million to acquire its teaching hospitals in reaction to the proposed merger of Fairview Health Services and South Dakota-based Sanford Health.)

Even Minnesotans who recognize the university as a critical state asset — and the Star Tribune Editorial Board is among them — should be wary of the request. In our view, the U should look more closely at budget cuts, reallocation and other strategies that reflect the realities of falling enrollments. The U needs to do more to "right-size" as it adjusts to changing student needs and demographics.

Since making the large additional request, U officials have appeared twice before a legislative committee after members of both parties rightly asked multiple questions and sought more specific information about individual campus enrollment figures.

A key question still needs to be answered: Why the need for so much more funding to educate significantly fewer students?

U leaders say they learned recently that the system lost about $24 million in revenue due to enrollment declines. In testimony before a House committee last week, Julie Tonneson, the U's budget director, said a big portion of the new request — about $48 million — would help cover a tuition shortfall more severe than any she's seen in her 30 years with the system.

Though the U's latest operations request includes a tuition freeze, the original budget proposal had anticipated a 3.5% tuition increase for in-state undergraduate students attending the Twin Cities campus and a 1% increase for students enrolled elsewhere in the system.

In an interview with an editorial writer, Myron Frans, the U's senior vice president for finance and operations, said the unexpected budget shortfall was primarily caused by fewer non-resident and transfer students and dramatically improved four-year graduation rates. All contributed to declining revenue.

Frans said that though there are fewer students, costs for mental health and other services have increased. He said U leaders are meeting with President Joan Gabel and chancellors on each campus to discuss ways to address the shortfalls. He added that there are expenses that cannot be quickly cut, such as employee contracts.

Rep. Kristin Robbins, R-Maple Grove, told an editorial writer that although trying to keep tuition down is important, lawmakers need to know more about what U officials are doing to keep costs down. She said the state is responsible for helping fulfill the U's mission, but it must do so in a sustainable way.

Rep. Gene Pelowski, DFL-Winona, who chairs the House Higher Education Finance and Policy Committee, said it is "absolutely essential to keep the U viable" as it educates future workers in areas such as health care and education where there are shortages.

Pelowski told an editorial writer that his committee would likely recommend "robust" funding for the U, but he also thinks more should be done to streamline U operations.

Robbins and Pelowski are correct: While the U merits significant state support, requests for taxpayer dollars should be based on responsible budgeting.