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 Office of the Chancellor

President Kaler's Visit to UMD Monday, February 17

Dear Members of the UMD Community,

It is a pleasure for me to announce that University of Minnesota President Eric Kaler, along with Vice President and Chief Financial Officer Richard Pfutzenreuter, and Budget Director Julie Tonneson will be at UMD on Monday, February 17. President Kaler, Vice President Pfutzenreuter, and Director Tonneson will answer questions about the University of Minnesota budget process and address other areas of interest to the UMD community.

The schedule of meetings includes:

Student Association Congress: 1-1:45 p.m., Griggs Center

Faculty Assembly: 2-3:00 p.m., Kirby Ballroom

Staff Council: 3:00-3:45 p.m., Griggs Center

As I indicated to the campus last fall, we are taking a multifaceted approach to resolve the budget issues at UMD. Unfortunately, rumors and misinformation regarding UMD's budget status and allocations continue. Some media reports are misleading and wrong. Many of the comparisons of funding between UMD and the Twin Cities are incorrect.

To reiterate what I said in the town hall, faculty and staff meetings last fall, UMD has a significant budget challenge resulting from a variety of issues including actual tuition revenues coming in below budgeted projections due to a drop in student enrollment, planned and approved expense reductions in 2011 that were not fully implemented at UMD, and a problem with the way fringe benefit costs had been handled within the budget at UMD for many years.

As I have indicated, we are addressing this challenge by reducing expenses, finding new efficiencies, increasing revenues, and seeking assistance from the senior systemwide leaders in the Twin Cities. We are making progress on all strategies, and having President Kaler and Vice President Pfutzenreuter, and Director Tonneson on campus further solidifies the assistance we are getting from the system leaders. Their visit will also provide an opportunity to further clarify the role they play in UMD's budget process.

While I continue to be a strong advocate for UMD's budget, I want to be sure we are using accurate benchmarks within the University of Minnesota system. Many of the analyses that have been circulating and published are simply inaccurate. Straight comparisons between UMD's budget and the Twin Cities campus budget are flawed. There are four points I would like to emphasize:

• The source document for the data analysis that was initially published in the Statesman and subsequently shared among some on campus is configured around the University's organizational/budgetary structure and was never intended to represent a geographic display of revenues and expenditures. Some allocations in the source document are allocated to a Vice President or Dean who is organizationally located on the Twin Cities campus, but has a state-wide mission and responsibility. To illustrate the problem of using this data to compare campuses, is the fact that the analysis attributes $89 million in stimulus funds to the Twin Cities campus when the funds were actually used in large part to provide system-wide undergraduate scholarships.
• The cost structure of the instruction, research and public service mission activities on each campus is not equal. UMD and the Twin Cities campuses have unique missions, activities and characteristics. We will continue to advocate for resources to further the UMD mission and vision.
• Multiple revenue sources support mission activities on each campus. State appropriation is just one piece of the combined total of appropriation and tuition. A major factor contributing to our budget challenges (and those of other units in the University system) is that over several years the state reduced the University's appropriation, and the University responded by increasing revenue from tuition. Units with large undergraduate student enrollment, such as UMD, became more tuition dependent, and thus, our revenues took a major hit when enrollment declined.
• The good news is that UMD's state operations and maintenance appropriation for fiscal year 2014 has increased, and this allocation will increase again in fiscal year 2015. Our new student enrollment was up this year and projections are that we will see another increase next year.

We need to be diligent in understanding the University's budget process and advocating for changes that will best position UMD for success. We will be most successful if we approach solutions through a partnership, as opposed to accusations based upon inappropriate comparisons. I have every confidence that the health and success of UMD are a priority for President Kaler and the system leadership team, and I believe that they will work with us to find solutions. That does not mean that we won't need to make tough decisions, but it does mean we have a strong partner.

The next steps in the Program Prioritization process were shared in January with the members of the University Coordinating Council and the Strategic Planning and Budget Committee, and were also posted online on the Shared Governance committee and the Program Prioritization websites. It will be discussed at the next Strategic Planning and Budget Committee meeting and at a town hall meeting within the next few weeks. Please contact a member of this committee or me directly if you have questions, reactions, or suggestions regarding Program Prioritization.

In addition to the the Program Prioritization Next Steps, three-step process of working with system leaders on the budget solution is available in UMD Financial Planning with the Twin Cities University Budget and Finance Office. We have completed the first two steps and are on schedule with the one remaining.

Along with the Program Prioritization process, the campus administrative units have been finalizing the Voluntary Workforce Reduction program. The work plans are in the final review stage, and staff and faculty who have applied for the program will soon be notified. I appreciate your patience as we worked through the details of this program to ensure that we were meeting UMD's needs as well as those of our valued employees, while helping to solve the budget challenges.

Meanwhile, I hope that you heard the exciting news that Maurices is donating its downtown Duluth headquarters building to UMD. The 75,000-square-foot building will be available to UMD in 2016 after Maurices moves into its new headquarters being built on West Superior Street. Plans include using the space to teach courses that involve interaction with the downtown community, offering continuing education and certificate programs, hosting classes for adult learning, offering space for conferences, and expanding partnerships with other higher education and K-12 schools.

Thank you again for the outstanding work you do for UMD. I truly appreciate your efforts and commitment as we continue to keep our focus on academic quality and providing an exemplary education for our students during challenging times.

Best Wishes,

Chancellor Black