Joint Fiscal Policy and Educational Policy Committee Public Hearing
Tuesday, October 6, 1998
Grand Rapids, Minnesota
Trustees Present: Archie Chelseth, Robert Erickson
Staff Present: Chancellor Anderson, Senior Vice Chancellor Baer, Chief Financial Officer King, Board Secretary Inge Chapin
- Call to Order
Fiscal Policy Committee Chair Chelseth called the meeting to order at 1:17 p.m. There were no action items as the purpose of the meeting was to hear public comment on the Allocation Model and the FY2000-2001 Biennial Operating Budget.
Welcome to the fifth and final regional hearing on the allocation model framework as well as the proposed biennial budget for the upcoming biennium. For those I have not had the privilege to meet, I am Archie Chelseth, a member of the MnSCU Board since July 1991, and the outgoing Chair of the Fiscal Policy Committee. With me today to my left, is my colleague Bob Erickson who has served as Vice Chair of the Fiscal Policy Committee and tomorrow will be the Chair of our new Finance/Facilities Policy Committee. And to my right, everyone knows Vice Chancellor King, keeper of the treasury; Chancellor Anderson; and Linda Baer, our Senior Vice Chancellor for Academic and Student Affairs.
I apologize for the scarcity of Trustees but I can assure you that Bob and I will listen very carefully and we will take back your concerns to the full Board.
As I mentioned, this is the fifth and final hearing. We have had similar events in St. Paul, Alexandria, Mankato and last night Tracy, which I understand was an overflow crowd, and, of course, here in Grand Rapids today. We are here today to hear from you on two topics, the first is the proposed FY2000 and Beyond Allocation Model and the second is the proposed FY2000 biennial operating budget. Both of these topics are obviously very important to the future of MnSCU's 36 colleges and universities as well as the communities and the students that they serve. The recommendations are the products of months and months of consultations with the Board, staff, presidents, academic and financial administrators, students and faculty. Both of these items will influence the work we do for years to come.
Even though these topics are closely interrelated, I would like to take testimony separately for each topic. We will begin with the allocation framework and then the budget.
It is our Committee's intention to record your comments which will be transcribed as part of the record and brought to the attention of the entire Board. The joint committees will be making the recommendation to the full Board for action at our November and December Board meetings. Once we have taken action, we will forward the Board's recommendation to the Governor as well as the Legislature for consideration.
- Overview of Allocation Model and FY2000-2001 Biennial Operating Budget
I am going to take a few minutes to give an overview for the benefit of members of the audience who have not been through this whole presentation. There are packets in the back of the room along with the salmon colored sign-up sheet if you are interested in speaking to the Board.
We are here to talk about recommendations that are coming to the Board concerning the MnSCU allocation framework and it seemed worth taking a few minutes to put the effort in context of the overall MnSCU budget.
In FY1997, which was the year information was used for the model that is in the packet, MnSCU's 36 colleges and universities combined had general operating revenues and expenditures of $785 million of which about $300 million was derived from tuition and fees and locally earned income and the balance was derived by appropriation from the State Legislature.
The Board of Trustees about a year ago adopted a policy which allows presidents to set and keep tuition revenue on their campus. So particularly for the state universities, which prior to the merger operated under an allocation method that redistributed tuition, that is no longer in force in MnSCU and the Board policy, in fact, does just the opposite and directs presidents to keep tuition revenue as well as fee revenue on campus. That left us with an obligation to respond to a charge from the Board for development of a framework that dealt just with the state appropriation in a manner which recognized the local income and tuition revenues.
In approaching the task, we first developed a vision for where we would like to be. If you have been following the materials we provided to the Board over the last six months, you will see that this statement developed through a series of dialogues with the Board about assumptions and values and goals and objectives of the overall exercise. You will see on the overhead the ideal statement we are putting out as the vision for this framework. This is a single model which equitably recognizes the diversity of MnSCU's student needs and adequately supports the unique educational goals of each institution.
The ideal circumstance is different from our current condition. It is important to recognize that where we want to be and the path we choose to get there is advised by where we are today. Currently, we are working with a framework which we hope will move us toward our ideal from an equitable standpoint and a biennial budget request which is the second part of the discussion today that moves us toward adequacy. In other words, we are recognizing in this exercise that while we can deal with the question of equity among institutions, we are here to talk about an allocation framework that distributes the resources. It is not an allocation framework that prints new money for us. In other words, it does not generate new sources, it simply distributes what we have. We can address the equity question but we need to rely on the biennial budget and the Legislature to address the adequacy question.
We have a transitional schedule which we have been talking to the presidents and the Board about which contemplates delaying implementation of the model until FY2002 for a variety of reasons which you will see illuminated in the packet. In the meantime, we would expect to simulate it annually as the data improves, make no adjustments until the next biennium and continue to work on improving the underlying data conditions so that when we start FY2000, we will be positioned properly for using the results of that in 2002. When we do implement, we will to do it in such a way that the incremental effect on individual campuses, particularly those campuses that are showing a condition of excess resources, be modest and temperate in their ability to change.
With the public hearings we have been building turnout and participation as folks have come to understand the Board's interest in hearing specific comments. The taped testimony of the hearings will be transcribed and we will also prepare an executive summary to have on record in the future. We are already starting to work on things we think the Board needs to consider that has come out of the testimony. We will take that discussion to the Board in October. The Board will be asked in October for a first reading on the recommendations and then adoption in November.
Also moving along on the same track is our biennial budget request. That similarly will be before the Board for adoption in December with transmittal to the Governor and the Legislature around the first of the year.
That is the path we are on. As I mentioned a few minutes ago, we are not recommending implementation. We are here today to hear about the overall framework and take your advice about modifying it or improving it in the coming years before implementation.
Are there any questions of Vice Chancellor King before we begin our presentation? If not, President Rasmussen.
- Public Comment
I am Allen Rasmussen and I am President of Rainy River Community College. I have served on the Presidents' Allocation Model Committee since its inception approximately 1-1/2 years ago, chaired by Roland Barden, staffed by Laura King, Judy Borgen, Karen Kedrowski, Susan Nemitz and Ron Dryer.
I wish to thank President Barden and the MnSCU staff for their hard work and commitment.
I believe the allocation and proposal is overall a good one. No model is perfect and can accommodate every college, department or program perfectly. But this model is dynamic and has provisions for change and over time will improve with the accumulation of common and better data and experience. It is built on MnSCU system values and has excellent principles.
Contrary to Trustee Brataas' suggestion that the implementation period is too long, I believe, as the Committee suggested, we must proceed slowly.
We must remember the lessons learned from the last model that was to be implemented. It was devastating to small rural colleges and was rejected by the Legislature because it did not provide for gradual change. This will happen again if we impose rapid change on MnSCU institutions. Also the data that has been gathered is very insufficient (one year's worth) and unreliable (not comparable from institution to institution). One concern I have when speaking on behalf of small colleges is, although this addresses fixed costs such as facilities and a minimum administrative structure, it does not, at this time, address providing minimum course offerings necessary to maintaining the viability of a college.
This model must deal with the fact that per student costs will always be greater at smaller Rainy River Community College institutions that do not have economics of scale. Let me give you an example. RRCC must offer general physics (calculus physics) if we are to have the minimal science offerings offered at any college. If we do not offer general physics, students who are planning a career in engineering, medicine, aeronautics, etc. cannot attend RRCC. Our average number of students in a class such as general physics is approximately five. That makes that class very costly but as you can see still very necessary. The model must deal with higher per student costs at smaller institutions.
Your responsibility as MnSCU Trustees is to provide access to quality education to all Minnesota citizens. I believe this model addresses that responsibility, at least in principle.
Lastly, thank you to Trustee Chelseth for his years of service and commitment as Chair of this Committee. Your time and effort are noted and appreciated.
Questions for President Rasmussen? Thank you.
My name is Pat Johns and I am President of Anoka-Ramsey Community College. I want to thank the Board for providing the opportunity to speak at these public hearings. The hearings are crucial in developing a solid allocation model. I also appreciate all the time, energy and research conducted by MnSCU staff as well as the committees that have developed this model.
I would like to make a few points regarding the proposed allocation model:
- The concept of a single model across the system is fair and equitable. Funding "like" programs across institutional type makes sense.
- Providing an allocation with few restrictions supports local flexibility to meet needs and provides for local institutional decision making. Accountability is also a factor in the equation. It would be impossible to develop a statewide model that was restrictive and satisfied needs at the community level.
- The model accommodates multi-campus colleges for their physical plants. This operational allowance is necessary.
- An adjustment I would like to see considered or reconsidered is the allocation of one of the set asides, that is, the amount for continuing education and customized training. I would like to see funding based upon programs rather than by types of institutions.
All funding in this area should be performance based, but the resources should be accessible by all institutions throughout MnSCU on the same basis.
Finally, no model is perfect. However, regardless of what the numbers show today, the model itself appears sound, defensible and equitable. We must take a step forward. I would like to see the model implemented sooner rather than later. Perhaps resources to implement the model could be obtained through our biennial budget request.
Thank you. Any questions? Mr. Erickson.
President Johns, you mentioned continuing education. I do not think we have had a lot of discussion on it at the Board level so maybe you can elaborate on it a little more.
If I might Trustee Erickson, you are right, I do not think this has come up before in any of the hearings. President Johns is referring to one of the items that is troubling in this recommendation, in the set aside box. We will be talking about it again, both when we look at the fiscal 2000 recommendations and the biennial budget request because it is an instance where we had a prior program this is a pre-merger set aside that has been retained under the old rules. I think there is broad support for the recommendation that the resources be opened up to other parts of MnSCU. It has a negative effect on the technical college side because the resources are to the technical colleges exclusive benefit right now. We have looked at this both as part of the budget process and as part of the allocation process because of its unique nature. The resources go out in dollars per credit which is kind of an incentive funding mechanism for customized training programs but it is a holdover in its design from the pre-merger.
Further comments. Thank you Pat.
My name is Allen Jackson. I am a farmer from Grand Rapids. I want to talk today a little bit about concerns regarding the farm management program. Remaining testimony not audible on the tape.
Vice Chancellor King posed a great question and I want to ask it of you. Do you have a perception or some idea that programs such as this are extraordinarily threatened by the Board or the MnSCU system?
I guess I do not.
But we have heard your point and again, glad you came. Mr. Erickson.
I want to join in saluting you. This has been an area that has come up in recent hearings. I have learned about it in the comments that have been raised in southwestern Minnesota.
Any other questions of Mr. Jackson? Thanks again.
My name is Tom Fauchald and I am from Bemidji State University. Chancellor and members of the Board of Trustees thank you for this opportunity of allowing me to speak today on the subject of the proposed allocation model for the Minnesota State College and University System. I have personally been involved with the finances and budgetary practices of the state universities and MnSCU for approximately the past decade in the capacity of serving as the Chair of the Inter Faculty Organization Budget Committee and serving on the MnSCU Finance Task Force before the birth of MnSCU.
Today, however, I am offering testimony as Chair of the Budget Committee of Bemidji State University, a concerned faculty member of Bemidji State University, and as a citizen of northern Minnesota. The reason why I am speaking to you as a concerned citizen of northern Minnesota is that I strongly believe that the proposed budget allocation formula will, over time, deny academic opportunities to the students of northern Minnesota.
The issue I will focus on today is what this funding formula will do, in the long-term, to baccalaureate programs at the smaller state universities. It is my contention in the long run the proposed allocation formula will force the elimination of many high quality and highly employable baccalaureate degree programs at the smaller state universities because these programs will not generate enough FYEs at the upper division level to be viable under the proposed allocation method.
As an example, I would like to cite chemistry. According to the simulation prepared by the system office, the average cost of an upper division chemistry FYE is calculated by dividing all the state universities' costs for upper division by the number of FYEs generated by all the state universities, hence there are two variables in establishing the target average cost established by MnSCU upon which programmatic funding is based.
There can be a considerable amount of debate as to costs, for example, the seniority of the faculty or possibly the way the costs were allocated between upper division credits generated and lower division credits generated. However, for the smaller state universities, the cost problem is providing a minimal amount of staffing that is needed to offer the required coursed necessary to obtain a degree in chemistry.
To compound the problem of minimal staffing costs faced by the smaller state universities, there is a problem of smaller FYE generation, the second variable in determining the MnSCU target average cost. Attached to my testimony is a pie chart detailing the FYE generation of upper division chemistry credits of the state universities. Notice that the three largest state universities generate almost 78 percent of the FYEs of upper division chemistry credits. The large number of FYEs generated by the larger state universities means two things. First, the larger state universities obviously have more chemistry majors than the smaller state universities, but more importantly, the larger number of FYEs generated by the larger schools indicates that they have larger class sizes in upper division chemistry courses than smaller state universities. Second, smaller class sizes and having a minimum number of faculty to teach the curriculum means that the smaller state universities will almost always have a significantly higher cost per student than the larger state universities in small academic programs such as chemistry. Simply put, the larger state universities will drive the formula because they have larger FYEs than smaller state university programs. Having said that, they will have a higher cost and will always lose money under the proposed funding formula.
It can be argued that some academic programs at a university will lose money and others will make money and in the end the moneymakers will carry the money losers. In the short run I am sure that will be true. However, the experience in the technical colleges shows otherwise. In my years in dealing with the Finance Task Force to establish MnSCU, it was very evident to me that money losers in the technical colleges, who have always been funded on programmatic averages such as those in the proposed plan, were carried for a while but in the end they were dropped.
I feel strongly that unless some way is found to augment the proposed funding formula to reflect the smaller class sizes and minimum staffing requirements of the smaller state universities, many of the best and most employable baccalaureate degrees will be unavailable to the students in the regions that the smaller state universities serve. It simply is not fair to compare the upper division programs of institutions with 4,000 FYEs with institutions that have enrollments in excess of 10,000 FYEs. I strongly feel that unless MnSCU wishes to deny access to many superb baccalaureate programs to large geographic areas of the state a better solution needs to be found.
Thank you. Are there questions? Mr. Erickson.
Thank you Chair Chelseth. One of issues that I know we have wrestled with, had discussions among Trustees on, during this time period over the last couple of years is this whole issue of adequacy of funding in total versus the equity among institutions. I think that you probably raised issues on both. I have actually been quite frankly surprised when we look at the actual cost attributed to upper division and graduates that they are really not of a higher magnitude than they are and I think that speaks very much to how allocations have gone on within the institutions awhile ago. Now the intent of this model has clearly been to develop a model that in fact can contemporize itself and would change with that information. In other words, you have to start some place and one of the major interests of the Board would be to go back to the resolution that was passed in December of 1996. That resolution talked about having some kind of process where you could have updating and get this information going. I would be very interested and I am sure the Vice Chancellor is too, in getting further information as to why our level of funding, in general, for upper division and graduate courses does not follow more of a model that I would anticipate. We would make adequacy a legislative priority. One of the things we could do would be to use peer level data to show an inadequacy of funding. I think we are very very much committed to do this. As we talk about the model and the things that it will do, I think too often we look at it as being static. It is not static, it is intended to be dynamic and the dynamic functioning is exactly the kind of things that you are talking about where we need to take and do further research and look at adequacy of funding by level. The other issue that you raised is the large/small institution issue that President Rasmussen raised and others. I think you could also look at core curricula. But those are things that I refer to as more technical issues that can be addressed. We are having all these hearings to get as much information as we can on the table. When something like this is adopted, there may be unintended consequences. That is part of our jobs, to get feedback from you and the administration, to say something is an unintended consequence and to make some kind of modification. The points you raised concern all of us. We need to look very much at access. It is critically important how we go about developing this model. I appreciate your comments.
Thank you very much. Mr. Michael Field, Bemidji State University. Welcome.
Dr. Field's comments were not audible on the tape.
I think, if I listened carefully to your fundamental concerns, is one of having enough money, having enough money to do whatever the president and faculty believe is necessary to provide leadership and quality. Is that a fair summary of your comments?
Response not audible on the tape.
That goes to my second question. I asked the questions in this order because I wanted to make sure first, that your concern was that you simply do not have enough money but you started very early in your remarks with some comments about the framework preventing Bemidji from seriously impairing small high quality programs and then you went on to talk about how the accreditation is a part of how you offer programs. I could not make the connection between how this allocation plan impairs your ability to make decisions regarding which programs to support.
Response not audible on the tape.
Thank you very much. I would remind those who are testifying, if you have a printed text, it would be helpful to the staff if you share it with us. It would certainly ease the burden of trying to transcribe the tape.
My name is Tony Kuznik. We are grateful for the opportunity to meet with you and the Fiscal and Educational Policy Committee Board members to address our concerns on the allocation model. I want to follow-up on our testimony by highlighting some of the suggestions we discussed:
- Expand study using a six digit CIP code. This will allow for a more
accurate comparison between identical or like programs, especially in
the technical fields, i.e.
A. Separation of unique programs from other like programs. Example:
- Law enforcement programs which have skills components should not
be compared to law enforcement programs which are more lecture oriented.
RN nursing programs which have much more clinical requirements than LPN programs.
- Law enforcement programs which have skills components should not be compared to law enforcement programs which are more lecture oriented.
- We would like MnSCU to look into the average personnel costs of each college's full- time faculty. It appears that a college with a higher percentage of faculty at the high end of the salary scale is at a disadvantage when using average cost funding. Also, a larger college with many instructors in a department will have a lower average salary per department than a one person department at the top of the faculty scale. It is a double edge sword. A college could pay more out to the faculty member which results in giving monies to colleges who have less expenses and thus less costs.
- Colleges who use a higher number of part-time faculty have an advantage over smaller rural colleges who may not have a pool of part-time instructors from which to draw. Also, many smaller, rural colleges are staffed by one person departments and do not have the student numbers to add extra class sessions staffed by part-time faculty.
- Smaller colleges with transfer programs cannot eliminate many courses due to low enrollment as this would severely impact students. A core curriculum must be maintained.
- Fixed Costs. Severance pay should be considered a fixed cost. Insurance of retirees due to merger language should be considered fixed costs. Insurance payments to local school districts due to contracts in effect prior to the technical colleges joining the state should be funded separately and not included in average cost funding.
Finally, we believe the reduction of expenditures by local revenue seriously impacts the technical colleges and consolidated colleges. All the stand alone community colleges with the exception of Rainy River (37 percent) exceed 40 percent when comparing total local revenue to total expenditures. The former Hibbing Community College (before merger) would exceed 40 percent also if not for consolidation. However, our liberal education expenditures are reduced at 29 percent versus 40+ percent. We would like to see a comparison of costs between colleges excluding revenue as a factor.
Thank you. Any questions of President Kuznik? Thanks very much for your thoughtful presentation.
I am David Larkin, Acting Dean of the Graduate School at Bemidji State.
Education is presently undergoing considerable scrutiny and criticism. We are actively searching for better ways to do things and we are rapidly incorporating technology into what we do. In this time of rapid change the value and necessity of preparing leaders is crucial. Research findings have made the importance of leadership very clear. Leadership often makes the difference between success and failure. The focus of graduate education is to prepare leaders. People who successfully complete graduate programs are expected to be leaders and history indicates that they have been and they are. There is every reason to believe this will continue.
A concern with the proposed MnSCU allocation model is a lack of funding for graduate education at the state universities. One example is graduate preparation in teacher education. This is the largest program at Bemidji State generating 60 percent of our total graduate credits. Under the proposed model it is funded at $1,986 per full year equivalent. Using the same allocation model, upper division teacher education classes generate $3,059 per full year equivalent. In other words, an undergraduate student preparing to be a teacher generates $1,076 more dollars per year than does a graduate student. This does not make sense. Graduate education is a more costly endeavor but is reimbursed at only 65 percent of the rate of the undergraduate program.
One more example. In industrial technology lower division full-year equivalency is funded at $3,266. For the upper division full-year equivalency the funding is $3,654. Upper division courses cost $388 more per full year equivalent student. Graduate education full- year equivalency for industrial technology is $2,800. Graduate students receive less than lower division courses by $466 per year and less than upper division undergraduate courses by $854.
It would seem that the lack of logic in the proposed funding formula carries across the different higher education systems. For example, at Northwest Technical College only four programs are funded at or below the $1,986 rate of graduate programs in teacher education. Thirty-three of thirty-seven technical college programs are funded at a higher rate than graduate education in teacher education at Bemidji State University. This is not a criticism of the funding rate at the technical colleges. It is intended to reveal the difficulties associated with providing a quality graduate education given this formula. This is particularly true in teacher education.
In summary, I recognize that the inequities noted above may be addressed in the future. However, at this point in time I feel strongly that problems exist when it comes to funding graduate education and that these problems must be addressed before the funding formula is accepted and comes into practice.
Thank you. Any questions of Dean Larkin? Thanks for coming. Ms. Jackie Ryder, Bemidji State University. Good afternoon and welcome.
My name is Jackie Ryder. Twenty-nine years ago I was beginning my freshman year at what was then Bemidji State College; four years later I graduated with a bachelor's degree.
I returned to Bemidji State in September of 1986, when I accepted a position at the Center for Extended Learning where I still work as a Senior Office Administration Specialist. In 1988, the members of AFSCME Council 6 Local 1949 elected me to a leadership role. I currently serve as vice president of the local.
I am here today to ask you to reconsider the current proposal to freeze physical plant operations as part of the proposed funding formula. In FY 1995, 19 classified positions were eliminated from BSU's physical plant. To date, these positions have not been restored. Freezing BSU's physical plant operations at this low level is a disservice to it, the staff and the taxpayers.
There are eighty acres to maintain; lawns to mow, leaves to rake, shrubs and trees to prune and let us not forget snow to shovel and plow. Then there is the one and a half million square feet of buildings, 900,000 of which comprise the academic buildings. Care to guess how many square feet each general maintenance worker (i.e., janitor) is responsible for cleaning? Industry standards suggest 25,000 square feet. Our general maintenance workers in the academic buildings are responsible for 45,000 square feet.
The shortage of staff in the physical plant means that we are behind in our routine maintenance. As caretakers of public property, we are responsible for proper maintenance of that property thus saving the taxpayers the higher cost of repair or replacement.
I also want to bring to your attention an issue that BSU is facing. We need to have at least five individuals who work as stationery engineers. These individuals must hold a Class A boiler's license as they operate high-pressure steam 24 hours a day, seven days a week. Plant maintenance engineers at BSU are also required to hold this Class A license. The State of Minnesota issues the license; however, within the State of Minnesota there is currently no way to obtain the training necessary to obtain this license. The US Navy, formerly the primary trainer of such individuals, is no longer doing so as their needs have changed. As a result, we will be unable to find qualified applicants for these positions.
Thank you. Are there questions? Thanks very much. Mr. Bill Maki, Itasca Community College. Good afternoon and welcome.
I am Bill Maki, Director of Financial Facilities here at Itasca Community College. I have two comments that are of great concern to me. The first one is data issues.
Do not focus on the numbers, focus on the concept
FY 97 data - by consolidations - include point in time only
CIP codes - 1412 Engineering Physics
Minnesota West, Central Lakes, Hibbing
Hold harmless until FY2002
Entries in identifying institutions with need
My second concern concerns variable administrative allocations.
Almost forced to partner
Two-year core definition of administration
Less than 1,000 FYE - we get what we spend
We are not being rewarded for sharing services and being creative.
NESU - western consortium of human resources. I feel we need to get money to set up our own office. The conservative numbers I have put together -$37,000 - FY 1998 - to set-up our own office would be $81,000 just for our campus. By being creative and sharing services our college is saving $44,000 alone on human resources. NESU - result in $50,000-$70,000 savings. We would be able to take those dollars, put those toward research and fiscal services. I guess what I want to say is I feel that the allocation model contradicts the incentive to share our services. I believe it does not fit some of the framework principles which allow institutions to make budgetary choices nor supports academic planning by allowing institutions to keep additional resources within the institution for the students' benefit. I believe that Itasca is being creative by sharing services.
The model extends the Board vision of strengthening the role of presidents. It allows institutions to make the best educational decisions for the communities in which they serve.
Institutions make the best choices.
Communication during the process with the system office has been very solid this past six /seven months.
Thank you. Questions of Mr. Maki? Mr. Erickson.
Thank you Chair Chelseth. It is a common theme that we are seeing here in a number of things where people are looking at allocations that are based upon where you are at as opposed to where you would like to be. This is something that is very much a function of an allocation model. We should do some bench marking and look at what we really need for adequate facilities. The same thing would be true across the other areas. Again, the concept we have is that we want to begin to obtain the data and make decisions based upon information and seek to get better information. I am reminded as each institution comes up and talks and having sat in the Legislature and asked for funding, we have had good results this last year. We have all been struggling with the issue over a ten year period of bringing out a whole lot of sensitivity to putting additional dollars on the table. One of the things we all have to fully keep in mind is that whatever we do is not going to be perfect. If we take and hold ourselves to a standard that we want to look to the future and say we are constantly going to strive to improve the standards approved, we can do it with respect to the maintenance of the facilities, to make sure that in some of the staffing, whether it be personnel or something else that this can evolve over a period of time. We must also to be mindful of the limitations that we all face in terms of the legislative agenda. I hope that we are successful with the operating budget in the upcoming session and then the capital budget in the session that follows as we were in this last go around. History says that it is pretty difficult to get the money.
Further questions? Thanks Bill.
My name is Nancy Erickson and I am from Bemidji State University. Many of the comments that I was going to make have already been made. I would like to summarize a couple of points and come to a conclusion. We are struggling with the idea of an equitable model that will also allow for adequate funding. My colleagues have already brought forward the issue of the size of the institution and the problems that come along with that, upper division courses, and that sort of thing. We do need to be mindful of unintended conditions that may follow this model.
I would like to point out the role of the four-year institution in the State of Minnesota and especially because of the location of Bemidji State in the northern third of our area and the particular role that it played in the regional university. Comments earlier from Hibbing Community College about its role are essential for the community, for music, for art and that sort of thing. Bemidji State University has also played that role over the course of its history. What I would like to point out is that the state universities in the State of Minnesota have been the alternative to the University of Minnesota for a number of years. For us to be able to maintain that competition and to maintain the quality that we believe is in the state universities we need to have other factors looked at in augmenting the model. Trustee Erickson has brought forward the idea that this is a flexible model that is being worked on as we speak. I simply encourage the Board to continue to think in those terms as we move forward. We should have a single model with augmentation bringing into account the role and the area in which the certain university might be located. Also the size of the institution must be taken into account as well. A single model with augmentation which equitably recognizes the university and adequately supports the educational goals of the institution is important. As long as we can balance not only the budget but balance all the factors that are involved, with looking at the different cultures, or the different locations of the universities and colleges in the MnSCU system, we will have a good funding model. Thank you.
Questions? Thank you very much. The Joint Committees took a ten minute recess.
Dr. Kathleen Nelson
I am Kathleen Nelson and I am President of Lake Superior College. Welcome to northern Minnesota and thank you for the opportunity to speak to you on behalf of many other presidents, specifically the technical and consolidated presidents (consolidated presidents who communicated directly that they support the statements Dr. Musgrove and I will present this afternoon: Sally Ihne, Central Lakes; Jon Harris, Laurentian District; Ron Woods, Minnesota West; Colleen Thompson, Ridgewater; Gary Rhodes, Riverland; Don Supala, Rochester; Orley Gunderson, Northland).
Our intent is to share what we believe to be conceptual problems with the model; speak directly with the current model's perceived impact on technical education based on the FY1997 simulation; ask a series of questions for consideration of the entire model, not just its impact on technical education; and share a few solutions or thoughts for consideration regarding our perceived problems.
Positive aspects of the model:
Autonomy to campuses and presidents;
Recognition of both fixed and variable costs;
Appreciation to those who have worked tirelessly on developing the model; and
Phase-in time allowing colleges time to adjust.
My name is Robert Musgrove and I am President of Pine Technical College. Mr. Chair, Board members, Chancellor, as presidents we recognize the benefits and the necessity of a formula to use in determining funding levels for the colleges within MnSCU. Some mechanism for fairly and equitably and consistently distributing the state's dollars is essential for efficiency. However, it would, we feel, behoove the Board to examine carefully any funding formula system to determine what incentives it creates and to determine if those incentives are beneficial or detrimental to the interests of the system and the state. Ideally, the incentives and advantages created by the funding system are in concert with the strategic plan for the system and with the needs of the state and its students. With this logic in mind, we want to offer some assessments of the proposed formula model and its potential impacts for your consideration. We recognize the proposed formula system is not a finished product. Our intent is to delineate now some problems that we feel are inherent or may be occurring in the current, unfinished product, if you will, recognizing that adjustments may yet be made and should be made before the system is finalized.
Having come from a state system that uses an average cost formula to distribute funding, I have seen some of the incentives (or disincentives) created by that approach. First, it is intrinsic to the nature of average cost formula systems that they reward high volume/low cost programs and discourage low volume/high cost programs. For example, programs which do not require expensive labs and can be structured to feature a large amount of lecturing are low cost and can accommodate large enrollments. Humanities and liberal arts typically fit this description. Automation technology programs, on the other hand, are typically extremely expensive, a single industrial robot costs over $50,000 at minimum. In addition, automation programs are low volume. The inherent difficulty of the program and the expense involved in even a single station in a lab limit the number that can and should be enrolled. The effect of this cost and volume driven incentive is more aggravated when one compares programs within the same CIP code funding group, as Dr. Nelson will discuss later. The incentive for colleges in a system is to concentrate on the programs with lower costs and higher volume in order to maximize cash flow. This would also create a disincentive for colleges to look at the creation of low volume/high cost programs such as those in advanced and emerging technologies. Even with some form of startup funding, when the program is place on the formula, the operating expense will still drive the cost above the top of the range and force the college into a situation where it must underwrite some programs at the expense of full funding for others.
Granted that, under the proposed system, colleges may choose to use money generated by high volume/low cost programs to underwrite the costs of more costly offerings, an institutionalization of robbing Peter to pay Paul, so to speak. We would suggest that a more effective approach would be an adjusted formula system, one which would take into account that some programs, while expensive, are important to the health of the state's economy and that the system should create incentives for colleges to operate those programs. More on that later.
Average cost systems also tend to be enrollment driven, as is our current proposal. Enrollment driven funding which also utilizes average program costs creates an incentive and an inherent advantage for large enrollment schools. In turn, large institutions create, in an average cost funding system, economies of scale which are unavailable to smaller institutions. This is why our current proposal should eventually incorporate permanently either an access adjustment of separate, graduated tiers of program formulae for smaller and larger institutions or a fixed cost adjustment system as the result of a thorough analysis of the demands placed upon a college regardless of size. For instance, any college of any size must, in this age of complexity and accountability, employ a number of specialists to meet the demands placed upon it by accountability and compliance standards, diversity and accommodation requirements and reporting systems. No college can function without a highly trained fiscal officer, a registrar, a chief academic officer, a student affairs manager, a human resources officer and a combination special needs/accommodations/diversity expert. These are costs that are as fixed and unavoidable in today's higher education environment as is the physical plant. Even though the salary system allows for some differentiation between the same positions at small versus large institutions, typically, in the marketplace, these positions will not be that far apart in cost, and the differentiation will not be enough to compensate for the difference in economies of scale.
Under enrollment driven funding systems, large enrollments create the economies of scale that enable colleges to staff these offices fully and effectively. Without an effective adjustment system, enrollment driven funding does not typically provide enough slack resources to adequately staff the offices necessary to address the many compliance and reporting requirements placed upon colleges regardless of size.
It is important, while examining any allocation model, to examine its impact on various forms of education within MnSCU. We know you have heard throughout these hearings about the impact upon our state universities and some of our colleague two-year institutions. We would like to address, specifically, the impact we perceive upon technical education in our system. We would like to share with you why we believe the costs of technical education may be so high and we ask that you examine the model carefully to ensure that we are able to ensure quality technical education for our state's students. The FY1997 simulation clearly indicates that some factor is driving a greater burden of redistribution of funds to colleges with a heavy share of their program mix in technical education. While we are not sure what is causing this anomaly, we believe one exists.
Our colleges which have, as part of their program mix, regionally or nationally accredited programs, must bear greater financial burdens than those colleges with fewer or no such programs. These costs need to be recognized, somehow, in our model, perhaps through a more detailed review of program mix factors. As an example, colleges, such as LSC, with a high concentration of programming in allied health areas, must, by accreditation requirements, complete detailed program self-studies and site visits every 3, 5, 8 or 10 years for each of our nine allied health concentrations. Preparation for these site visits and the site visit itself increases the dollars needed to offer the program. Many of these accrediting bodies also set requirements for faculty student ratios, dental hygiene clinical at a 1 to 5 ratio, as an example. The costs of preparing for and conducting periodic evaluations by accrediting bodies for our programs and the cost of accreditation required low staffing ratios are costs not associated with many other types of educational programming. A myriad of accreditation standards impact the costs of instructing technical programs. Our technical and consolidated colleges are most affected by such factors and I would encourage you, members of the Board of Trustees, to reflect upon this issue in your deliberations of this allocation model.
Costs associated with accreditation standards are only part of the inherent high costs of doing technical education business.
The mere cost of equipment to effectively run technical programs should be, I believe, directly examined as part of this allocation model.
In order to continue offering Lake Superior College's advanced machine tooling program, we need to invest $63,000 every ten years just to buy a numerical CNC lathe, and this piece of equipment is only one of many needed in order for us to maintain the technologically advanced state of our equipment. I remember, well, the face of one of my community college colleagues when she looked, for the first time, at our machine shop and the equipment in the room. Her first response was, my the cost of running this program must be tremendous! I am already having nightmares about our college's average cost results the next year we buy such a piece of equipment. Spending $50,000 for an engine analyzer for our automotive technician program each five years, maintenance of our mid range AS400 computer at $20,000 per year, upgrading computer careers labs at LSC which should be a $50-$80,000 investment each year, purchasing dental chair units at $9,500 and X-ray machines at $18,000 are simply the cost of doing business in technical education. This model does not, I believe, examine the impact of these costs enough for our technical and consolidated colleges.
In some cases, our technical programs must endure other costs which are not borne by liberal education programs. Paying additional instructional support personnel, a receptionist and certified dentist consultants, in order to operate our dental clinic costs approximately $30,000 each year, and the added cost of support staff to maintain equipment for our computer careers programs means a $45,000 each year above the costs of other computer support staff.
Maintaining instructor certifications and training in highly advanced technical fields adds thousands of dollars to our budgets each year. I need a minimum of $10,000 each year to keep my computer careers faculty adequately trained in advancing technologies. I should be spending an additional $10,000 each year to advance training for my allied health staff. I cannot meet these obligations now. I have no idea how I will be able to meet them under an allocation formula which would decrease my college's budget.
Paying the costs of national accrediting fees for some programs adds cost for many technical and consolidated colleges. The American Dental Association requires $620 each year for our accreditation, the Committee on Accreditation for Respiratory Care requires $1,000 each year and the Joint Review Committee on Education in Radiologic Technology requires a $900 fee each year to maintain accreditation certification. The National Accrediting Agency for Clinical Laboratory Sciences requires accreditation fees of $1,050 each year. I have nine such allied health programs requiring special certification fees. I am glad there are no such fees associated with my English, philosophy or mathematics programs. These fees are unique to our technical programs and need to be considered in review of our allocation model.
Our technical and consolidated colleges must invest heavily in placement services in order to ensure appropriate contact with employers and job placement for students. At times, these contacts are spread far beyond a college's geographic region, as our technical programs train students for career positions across the country and, at times, around the world. LSC, as an example, spends nearly $80,000 for such services each year, thus ensuring our placement rate at over 97 percent for our technical program graduates, approximately 480 each year. This cost is essential for our technical types of colleges. Is this considered a fixed cost for us? We believe, clearly, that it is a fixed cost and needs to be considered.
Few non-technical programs of study require, as well, the investment of funds in working with employers to secure internship/on-the-job training/practicum sites for students as required in technical programs. Faculty and support staff spend countless hours arranging such opportunities and then must spend time monitoring these educational experiences. All of this takes staff time our college must invest in. In particular fields of study, including the health field, additional time must be spent to coordinate these internship positions, as students are being placed in highly advanced positions affecting the health and safety of others. Every one of my 70 practical nursing students must be observed by one of my licensed staff members as he or she performs each of more than 76 technical medical skills over the course of a year. These cognitive, psychomotor and affective skills are observed countless numbers of times prior to final testing. Such instruction is expensive, and any allocation model must adequately fund such technical education. Complicating the cost factors of some of these internship host sites is the fact that many are now considering charging our institution for the privilege of placing students at their places of business. In order to maintain safe, educationally sound and accreditation approved standards, we must invest far more on staffing for our technical programs than we do for many of our non- technical ones.
The safety factor alone carries high costs, and many of our technical programs have high safety driven costs associated with them. As an example, students entering a simulated 757 airplane fire (as they do in our fire management and air rescue and firefighting programs) in the midst of searing 500-100 degree heat need to be in instructional situations with no more than a 1 to 5 faculty/student ratio. In this case, in fact, every student must be in visual contact with an instructor at all times. Safety in this program and in others (health care, as an example) demands lower faculty/student ratios. Does our model pay enough attention to program mix to ensure that technical education is not jeopardized?
The factors I have delineated here this afternoon are some of the more significant inherent high costs of educating students in technical fields, but they are not the only factors. The important issue is, we believe, to ask how our colleges which serve the majority of technically educated students are being affected by an allocation model.
The allocation model we are examining today places heavy emphasis on a four digit CIP code for determining average cost funding for our instructional programs. In many instances, the use of the four digit CIP groups puts together programs, which are so dissimilar in cost that averages may be flawed in meaning. As an example, heavy equipment programs and diesel mechanics programs are listed in the same four digit CIP, however, the costs associated with heavy equipment operations far surpass those associated with diesel mechanics. If a college has a heavy equipment program but not a diesel mechanics one, the average cost formula will not benefit the college's allocation. Likewise, surgical technology programs and respiratory care programs are grouped together in a four digit CIP, but the costs of the former are decidedly different than the costs of the latter. As a specific example of this cost differentiation, let me use a third example. In order to set up a basic electronics laboratory, a college needs to invest approximately $450,000 in equipment and $40,000 in instructional costs. However, to begin a robotics program in the same CIP, a college must invest $1.5 million in equipment and $55-60,000 in instructional costs. I would suggest that it is important to examine the adequacy of using the four digit CIP as a measure of program cost averaging in this model.
Enrollment driven funding systems are inherently backward looking. The tacit assumption is that the immediate past predicts the near future. This works best in slow growth environments. In situations of rapid growth, the revenue stream will not keep pace with institutional and student needs. In situations of enrollment decline, it becomes a self reinforcing cycle, a drop in enrollment precipitates a decrease in funding, which results in program cuts, which drive further enrollment declines. This is most painful in institutions involved in the midst of substantial program restructuring. Assume, if you will, that a college is in the process of dropping a program where there is decent student enrollment but no industry demand. In such a situation, acting in the best interests of the students actually results in an outcome, loss of formula funds, which is detrimental to the college.
Finally, formula systems have a tendency to distort the planning process. Even when the funds are delivered in a lump sum, managers will (and, in small institutions, must) consider the effect of the formula when developing the plan, since that formula must eventually fund the plan. Thus, the formula becomes a driver for the plan and often assumes an important role to the mission of the college or the needs of the state. For instance, as the president of one of the smallest institutions in the system, I must, for survivability in an average cost formula system, seriously consider low cost, high enrollment programs to preserve the health of my institution. These programs may or may not be the best fit with my college, my region or the needs of the state. The design of the formula is critical, then, in insuring that the cash flow system creates incentives that are aligned with the needs of the state and its students.
Collaboration from both a pragmatic and idealistic standpoint is expected of our MnSCU institutions. We see it reflected in our legislative initiatives, our discussions at Board of Trustee meetings and in our Chancellor's presidential expectations. The questions become then: how are we rewarding collaboration in our basic allocation to colleges? Our consolidated colleges are the ultimate examples of collaboration. We are the collaborative models to which others should look, and yet, our consolidated colleges will, as a group, bear the greatest burden of reallocated dollars in this model. Are we examining the ways that we collaborate with one another in attempts to save money and provide better services to students, and are we, then, rewarding such behaviors? How is the value of collaboration reflected in the allocation model?
Secondly, legislative expectations have also been set which clearly tell us that we are expected to increase the monies we spend on instruction versus non-instructional spending. The question then becomes: how are we going to balance the needs of many of our institutions to decrease spending when we receive fewer allocation dollars with the legislative mandate to increase spending in instruction? Again, how will we voice our values within the allocation model and how will we address the anticipated legislative inquiries?
Thirdly, legislative requirements, accrediting bodies' regulations and Board of Trustees' expectations for our colleges seem to seldom decrease in either volume or sophistication of analysis. We are working with increasing demands to meet the needs of our students in a variety of ways. We are constantly looking to be more accountable with our educational programming, policies and fiscal resources, as well we should be. With our increasing need to be attentive to such expectation, we need to ask another related series of questions: what really constitutes a core administrative structure at our colleges? Does this core structure vary according to the type of institution to which allocation will fall? How often will we review the decisions we have made in this core structure? How sensitive to shifting needs and demands will our decisions today be on future allocations?
The issues my colleague and I have raised here this afternoon are meant to stimulate thinking and reflection about the impact of this allocation model on, particular, our technical and consolidated colleges. Technical colleges, in this model, lose 19 percent of the reallocated dollars and gain 20 percent, however the consolidated colleges lose 46 percent and gain only 1 percent. Together, these institutions have a net loss of 44 percent of the reallocated dollars. If we look more directly at the allocation model's effects in light of change as a percent of appropriations, then the technical colleges lose $786,444 of an estimated $53,859,908 state appropriation, or 1.5 percent. At the same time our consolidated colleges lose $2,006,985 of an estimated $147,451,873 state appropriation, or 1.5 percent. Our stand alone community colleges gain $1,992,182 of an estimated $27,125,620 or a gain of 7.3 percent of their current appropriations. My colleagues and I are simply not sure how we continue to fulfill our missions if such a dramatic decrease in funding occurs.
If we look at the net effect of the formula on the ten smallest institutions in MnSCU and compare that to the effect on the ten largest institutions, the impact of an enrollment driven formula is clearer. Note the following figures are taken from the salmon simulations:
Smallest Ten Institutions Change in
Previous Budget Percent
Pine Technical College
Fond du Lac
Red Wing/Winona TC
Largest Ten Institutions Change in Budget Previous Budget Percent Change St. Cloud State
Northwest Technical College
In essence, the small ten institutions undergo an 8 percent budget reduction, a fairly substantial cost. Most of that amount ends up with the large ten institutions. However, the net gain for those ten institutions represents only a .6 percent increase.
A number of modifications or adjustments in the formula system itself are needed to offset or rectify the undesirable or unintended consequences or incentives.
The vision of the ideal state for the model is admirable, an excellent example of the customer first attitude at MnSCU. I would suggest, however, that it omits one customer, the state's economy in the form of its industrial base. I would suggest that this statement of philosophy also take into account the economic needs of the State of Minnesota and the need of Minnesota's industries for an educated workforce. This addition would give a new strategic dimension to the vision and would state clearly and emphatically MnSCU's commitment to that sector and its concomitant intent to have the plan drive the budget.
One method of recognizing that some high cost programs are indeed in the state's best interests would be to derive a list of targeted occupations that are critical to the state's economy. Selecting targeted occupations for which there is a critical need within the industrial sector then structuring a weighted formula which creates incentives and rewards for programs in those CIP code areas. This would stimulate program development and expansion and enable colleges to bring those programs up to a competitive standard. It would enhance the educational pipeline in areas that are critical to the competitiveness of the state's workforce.
Creating a special start-up fund to spur the development of programs in new and emerging technologies, followed by a special formula grouping or weighted formula would provide incentives for colleges to initiate and then maintain programs in such advanced areas as biotechnology, automation/robotics, materials technology and others. Such a capacity would enhance the state's workforce training system and serve as a lure for industries. Part of our mission as technical educators is to enhance such economic development and workforce training. Special incentives in our allocation model would surely assist us in these endeavors. Perhaps part of this model should more clearly address differences in educational type based on program mix and mission in order to enable those colleges which specialize in technical education to begin and to continue offering advanced technological training.
If we recognize that there will always be small institutions in the system (for whatever reasons), then it would follow that any system should take into account the needs of smaller schools. Our worry is that an add-on access adjustment is not really part of the formula, it is a recognition that the formula model itself may not meet some important perceived need. Add-ons - line items, if you will, can become targets and have a tendency to go away. Incorporating the access value into the formula model itself would both affirm the system's commitment to access and remove the wart, if you will. For instance, a two-tiered formula system that groups smaller schools together and separately from the large schools in calculating averages would be such an approach. As would a fixed cost adjustment that takes into account all the unavoidable costs a college faces, including those staffing requirements driven by mandates, compliance issues and accountability standards.
Discussions about the allocation of our system's fiscal resources are never easy, and again, Dr. Musgrove and I praise our colleagues for their courage and commitment to these discussions over the past months. It is important, however, for you as members of the Board of Trustees, to have before you the questions and concerns many of our students, staff members and community leaders are debating on our campuses and in our communities. We speak on behalf of many of these individuals. We know that you will take our comments and our questions into full consideration as you discuss and debate the impacts of this decision upon all of us.
Thank you again for your time and attention.
Thank you very much. Mr. Erickson wants to ask some questions.
I am struck as I listen to what is going on today that people are constantly coming back to this as being something that they are viewing as a static model. Many of the comments are based upon that kind of thing. One of the issues that we need to grapple with is there are endogenous variables and there are exogenous variables and I hear a lot of discussion and talk about things that people are saying are exogenous I cannot do anything about this. I would argue many endogenous. If we had been in this room two years ago and having these hearings, the two schools that I would least likely have thought to increase enrollment would probably be Pine Technical College and Southwest State University. In fact, because of their own actions, they took an exogenous variable. They said it is endogenous and we, in fact, can do something about it. They made a difference. We need to recognize that what we must create here is something that is dynamic, that we do have the courage to change and I fully intend to keep on that particular point. I know in discussions with the Vice Chancellor and other Board colleagues that there is a strong feeling about the importance of it so that we can tune this over time, if necessary. I do not want that to be construed as something we are going to be revisiting every six months because we cannot. We do need to look at major things and some of the things you are talking about in terms of an entrepreneur or something to start new forces are things under consideration and are very much a part of the scheme.
We again, need to recognize that we, through our actions, can have a lot of impact on this and when we talk about averaging, averaging has been going on in higher education forever.
Ms. Johanna Asmussen, Bemidji State University. Good afternoon and welcome.
Thank you for giving me the opportunity to speak to you concerning the proposed allocation model. I am Johanna Asmussen the president of the Bemidji State University Faculty Association and a professor of education. As BSUFA president I represent the more than 200 faculty members at Bemidji State. I would like to speak to you today about equity and difference.
Professor Gerald Nelson, a colleague of mine at BSU, had a sign on his classroom wall that said, "The most unjust thing is equal treatment of unequals." The allocation model as proposed is equal treatment of unequals. Please note that I am not using unequal in the comparative sense of good, better, best, but only in the sense of different, not possessing the same characteristics as another.
The missions of the state universities are different than the missions of the other groups in the MnSCU system, and each group should have a different mission. This was recognized when we were each given a different mission by law. We are not all the same, by design as developed by the legislature and put into statute. Because we have different missions, we have different accrediting systems. Our accrediting systems and boards require the meeting of different objectives, ranging from faculty preparation to library holdings. These differences in requirements streaming from our mission have direct relationship to the cost of delivering seemingly similar services. In the case of faculty those services are classes, advising, research and creative endeavors, service to the university and the larger world.
I tend to think in analogies and I would like to share this analogy with you. The various faculties of the MnSCU system are like oils. Each is valuable and necessary, but they are not interchangeable and have different costs. When I want margarine for my toast I do not use cooking oil, and when I need oil for my car, I do not use margarine, and when I go to the store each has a different price tag, but they are all oil.
To ensure that everyone continues to do their jobs and fulfill their assigned missions at a level of excellence, the differences, all the differences between and among the faculties and institutions represented, must be taken into account when creating a way to fund the system.
Please make sure we do not end up with motor oil on our toast, or worse yet, make a homogenized oil that will go in cars and on toast. We are not the same and the funding formula must ensure that we are treated according to our differences.
Thank you. Any questions, comments. President Joe Sertich, Itasca Community College.
President Sertich's comments were inaudible for transcription.
Any questions of President Sertich.
I am Sally Ihne and I am President of Central Lakes College. Last week, we had 22 interested persons including students and employees of CLC meet to discuss the allocation framework and biennial budget request. Conceptually, we agree with the components of the allocation framework but we have some specific concerns.
We believe the allocation framework provides more flexibility and autonomy for the colleges/universities by allocating a lump sum to each college/university.
We are concerned about the data integrity issues. There is a need for consistent coding across all areas of the institution and system. We are concerned that changes in reporting could change the model, and that the model/formula will be put in place before we get good data.
We are concerned that this model focuses on the old paradigm of education. It does not take into account new ways of providing learning experiences.
The allocation framework is very detrimental to the comprehensive colleges. We need to identify what the factors are that are negatively influencing this issue.
We appreciate the proposed allocation study areas and encourage broad-based participation.
We realize that the allocation framework is based on equity rather than adequacy. We believe that the adequacy of funding needs to be addressed through the biennial budget request.
The biennial budget priorities are:
- Equipment Funding
- Staff Development
- New Program Development and Expansion Funds
- Additional Library Funds
- Adequate Research & Development funds
Any questions of President Ihne. Thanks so much. Mr. Maximilian Wasdahl, Minnesota State College Student Association. Welcome.
Mr. Chair, my name is Maximilian Wasdahl and I am the President of Minnesota State College Student Association. The tape was not audible at this time.
Thank you. Any questions of Mr. Wasdahl. We really appreciate you coming.
I have a statement from Rich Straka, Vice President of Finance and Operations, South Central College. He was unable to attend the Mankato hearing and asked that his comments be placed in the record.
My name is Rick Straka. Mr. Chair and fellow Trustees, thank you for the opportunity to discuss the allocation model and biennial request with you. I apologize for not making these comments at the Mankato hearing on September 29, 1998, and appreciate your willingness to accept these comments in written form at the present time.
First, and foremost, I want to say that the proposed allocation model makes great strides in decentralizing decision making to the presidents. Although the model does make use of program costs in calculating the instructional bottom line allocation, the model does not drive instructional allocation by program. The presidents and local academic administration keep the authority to decide individual program funding levels.
The model stresses decisions. While we would most certainly desire above average funding of all of our programs, in comparison to both MnSCU and national peers, the reality is that there is a limit to our current funding. Institutions must make decisions as to which programs they wish to fund at a level greater than their peers, and which may be funded at a lower level. These choices are difficult, and no one wishes to say they fund a below average program. But institutions are being given the opportunity to make these decisions locally through the proposed model. Institutions are given a lump sum allocation and are free to determine how to allocate these funds within the institution.
I believe the proposed model is on track for implementation. The model may require some tweaks and adjustments, some of which have already been identified and documented. But I sincerely believe that these adjustments will not affect the overall soundness of the concept of the proposed model. The basic goal of a simple, unified model, which increases local authority in deciding how allocated funds will be spent on a local level is achieved in this proposed model.
In summary, I want to go on record as supporting the core concepts of the proposed allocation model and the further study on items already identified and documented.
I would like to stress only one point in the biennial budget request process. I believe that there needs to be an explicit allocation for inflation. There should be some tie between funding for inflation and the collective bargaining process. The current process of funding and negotiations has led to real purchasing power losses within MnSCU for the last decade.
My hope is that this would also help speed up the collective bargaining process which would greatly enhance the institution's ability to effectively plan for the biennium.
Anybody wishing to be heard? If not, just a couple of closing comments. First, I want to give the gavel to the new Chair with my best wishes for success in managing some tough issues. Secondly, I just want to thank my friend and colleague, the Vice Chancellor. You have been very professional, very cooperative and a good friend in helping me carry out the duties and responsibilities of the Chair. Thank you.
The meeting was adjourned at 3:48 p.m.
Recorded by Inge Chapin