University of Minnesota law school seeks subsidies to maintain top ranking

For six years, the University of Minnesota law school has been struggling to make ends meet in the face of a historic drop in enrollment.

Now it's asking the Board of Regents for an extra $3.6 million next year to help cover its red ink. And that has triggered a debate about how much the U is willing to spend to ensure that it remains one of the nation's top-ranked law schools.

Garry Jenkins, the dean, is quick to point out that things are starting to look up for the law school. Applications are up and tuition dollars are on the rebound for the first time in years, he said. But he and other university leaders say the extra funds are needed to get through a few more lean years and maintain the quality of the law school, which is No. 20 of 194 schools on the influential U.S. News and World Report ranking.

"We have a 130-year history of having one of the great public law schools right here in Minnesota," said Jenkins. "We're looking to just have the resources that we need to compete."

But some regents are growing weary of the law school's repeated requests for help, after pumping in $17 million in subsidies to cover its year-end deficits since 2013.

"Don't get me wrong, I want to be in the top 20," said Regent Michael Hsu. "I'd rather be in the top 10 if we could pull it off. But the question is, at what cost?"

In his proposed budget, U President Eric Kaler is calling for a one-time infusion of $1.9 million, plus a $1.7 million increase in its annual appropriation, to help balance the law school's budget next year. The regents are scheduled to vote on the request June 8.

It wasn't that long ago, officials note, that the U law school was flush with cash. With nearly 15 times as many applicants as openings in 2010, it was able to fill its classes with top-ranked students. And it raised enough money from tuition — which is now $42,000 for Minnesota residents and $50,520 for nonresidents — to cover most of its costs. As a result, Jenkins points out, the law school historically has taken a smaller fraction of its budget from the university's central coffers than most academic units.

But a "seismic shift," as U officials call it, shook up law schools nationwide in the early part of the decade, when a shrinking job market scared off prospective students. Nationally, law school applications plummeted to a 40-year low by 2014, and at the U, they dropped by almost half.

It was, as Jenkins put it, a "sea change." And the U, like other law schools, found itself on the wrong side of the law of supply and demand.

"Law schools are fairly tuition dependent," said Jerome Organ, a law professor at the University of St. Thomas who has studied the trend. So a sudden drop in enrollment, he said, meant "a significant reduction in revenue across law schools."

The U law school faced a dilemma, Jenkins explained: remain highly selective and enroll fewer students, or lower its admission standards, which would fill more seats but hurt its national ranking. The U chose to preserve its reputation as a top-flight school, and its entering class shrank by almost a third, from 259 students to 176, between 2010 and 2016.

To save money, the law school laid off staff, eliminated programs and even cut pay for tenured faculty, according to Jenkins, who became dean in 2016.

"We've cut about $6.7 million from our budget," he said. "But we can't solve this problem through cuts alone."

The law school started asking the regents for help in 2013 and has since received a total of $17 million in one-time transfers, along with an extra $7.5 million in annual appropriations.

Two years ago, the regents were assured that the end of the crisis was in sight. David Wippman, who was then dean, predicted that the law school would be back on its feet, and the subsidies would end, by 2020. But now, officials say that was overly optimistic.

"That's the problem with any prediction," said Jenkins. "You don't know when the market will stabilize."

Some regents vented their frustration at a meeting May 10, when they were briefed on the law school's latest request.

"The bottom line for me is the cost of this subsidy," said David McMillan, the board chair. "[It's] beginning to get to the point where it's too painful for other elements of the university to continue to bear."

He noted his "sympathy for the plight they're in," but added that his patience was wearing thin. "In short, I'm in for a little bit longer, but not much."

Darrin Rosha, a regent who graduated from the U law school in 1996, said the school needs to find ways to solve its financial problems "so we're not asking some undergraduate from Cokato to subsidize one of our professional schools."

Hsu said that's especially a concern now, when the university is considering raising undergraduate tuition by 2 percent.

"If the law school wasn't in a situation where they needed the extra money," he said, "then there would be less of a burden on trying to increase tuition."

Kaler, though, said the two issues are not connected. Under university policy, all tuition paid by students goes to their own academic units, he said. "No, undergraduate tuition is not going to support the law school," he said.

"It's a little disingenuous to say, well, if you didn't have to do that spending, we wouldn't have to raise tuition," Kaler said. "It's considerably more complicated than that."

Jenkins said he believes that the university, and the state, will benefit from the investment in the law school. "None of us are happy with the fact that for the last six years, we've needed a year-end transfer to balance the books," he said.

But he noted that the law school continues to draw top talent from around the country and that many will spend their careers in Minnesota.

"That's because students are recognizing that this is one of the nation's premier, pre-eminent law schools," he said. "And we want to keep it that way."

Maura Lerner • 612-673-7384