By Brent Gustafson, finance director

As we've noted a number of times in previous columns, most of the budget for the College of Liberal Arts comes from tuition and state appropriations. This column will focus on an important and more restricted source of money--donated funds. For CLA, like many higher education and non-profit organizations, donated money from fundraising is an important source of money to meet key priorities and can supplement and enhance the activities from larger sources of funding. In FY 2013, CLA has budgeted $9.3 million of spending from gifts and endowment earnings. At the close of the 2012 fiscal year, the total value of CLA donated funds was $215.9 million. The amount of spending from donated funds is small compared to the total amount of money that has been donated, and the reasons for this are explained below.

Donors and Donations
As the name implies, donated funds are resources that result from the philanthropic gifts of varying sizes from all types of donors (individuals, foundations, etc.). Some donors give sizable sums to CLA and other donors give smaller amounts. The manner in which they give can also vary--some gifts are unrestricted (or discretionary) as to their use, while other gifts have very specific criteria for how the money can be spent by the college.

Types of Donated Funds
Within the University's structure for donated funds, most of the money is held and managed by the University of Minnesota Foundation (UMF). Donated money that came to the University prior to establishment of the Foundation is held by the Treasury Accounting Department, a support unit within the Controller's Office.

Many organizations that raise private money have endowments. These endowments typically have constraints both in terms of what the money can be spent on as well as how much can be spent. The endowment funds within the college or within the University should not be thought of as one large balance, but rather they are a collection of many smaller endowment funds, each with its own intended purpose, as articulated by the donor. The types of funds can also differ:

• "Permanent Endowments" are those funds for which the principal balance cannot be spent, but the spendable payout (4.5% of endowment balance, averaged over the prior 20 quarters) on that endowment creates a revenue stream that can be spent on the fund's intended purpose. At the University of Minnesota Foundation, a gift needs to be at least $25,000 to establish an endowment.

• "Quasi Endowments" are quite similar to permanent endowments, but for these funds, a portion of the principal balance can be spent, in addition to the investment earnings.

Both permanent endowments and quasi endowments are held in longer-term investments and therefore subject to greater market risk. This can significantly affect the earnings and valuation of these funds over time.

• "Demand Funds" are essentially cash accounts that can be drawn upon in full to meet the intended use and do not have provisions to limit the spending. Demand funds are held in short-term instruments with virtually no market risk.

The following table indicates CLA's donated fund balances at the close of FY 2012 by type of fund (click chart to see larger):

Designated Purpose
The designated purpose of a CLA donated fund is recorded in a Memorandum of Agreement (MOA), which guides how funds are to be spent. These documents blend individual donor preferences with institutional goals and guidelines, and they must be adhered to when funds are allocated. Often, MOAs reflect the college's fundraising priorities. For example, in recent years, CLA has prioritized fund raising activities around undergraduate scholarships and graduate fellowships, and many of our MOAs restrict the use of donated funds to these purposes.

Below is a table indicating the breakdown of CLA's donated funds by types of activities the money supports:

Stewardship
After funds are raised, the college has an important role in ensuring that donors' intentions are met through effective use of these funds. This stewardship function helps keep donors aware of activities associated with their gifts and can also help the college in its efforts to obtain future donations.

Good afternoon. Regents, deans, faculty, staff, alumni, family members and friends of the graduates, and graduates, it is a pleasure to be standing before you as this year's commencement speaker. Nearly thirty years ago I finished my dissertation at the University of Minnesota; it was December 1984 and I had a job and a new wife and it was winter, so I didn't stick around for the ceremony. I was determined to get to California and Berkeley as fast as possible. At that time I had no way of knowing the twists and turns ahead; nor did I know what I was missing by forgoing this ceremony. Few of my peers participated, no one in my immediate family had earned more than a bachelors degree, and my mentors gave me much sage advice but not about graduation. They, like me, delighted in the fact I had a job. So instead of marching, I and Jayne London, my wife at the time, loaded up our recently purchased Honda Accord, picked up our friend John Campbell, whom we were transporting to his family home in Ames, and commenced a multiday travel course west. A van had picked up our meager household possessions and we had a date to rendezvous in Emeryville.

Professor Thomas Rose (art) has had his recent book projects Secrets, the collaboration with Chinese artist Lo Ching, and Time Frames acquired by the Whitney Museum of American Art. Time Frames has also been acquired by the Library of Congress and the Yale University's arts library special collections.

Professor John Freeman (political science) has received the Wallerstein Award from the American Political Science Association's Political Economy Section. The Wallerstein Award is for the best article in political economy published the previous calendar year. John and his coauthor, Dennis Quinn (Georgetown University), won the award for their article, "The Economic Origins of Democracy Reconsidered," which was published in the American Political Science Review, February 2012.

Associate Professor Carl Flink and Professor Ananya Chatterjea (both theatre arts and dance) are both recipients of 2012 McKnight Artist Fellowships for Choreographers. Now, in addition to that award, they have both received residencies for the 2013-14 season. Carl will spend six and a half weeks in residence at the American Dance Festival (ADF) in Durham, N.C. in June-July 2014. He will create a new work using dancers from the prestigious ADF Six Week School. His new work will premiere at the festival on a shared evening. Ananya will spend one week in residence with her company, Ananya Dance Theatre, at the Tofte Lake Center near Ely, Minnesota, in July 2014.

By Brent Gustafson, finance director

Many of the columns in this series to date have focused on the large and flexible sources of funding in the budget for the College of Liberal Arts, such as tuition and state appropriations. This column will examine some of the fiscal aspects of grant funding, a smaller but still important part of the CLA financial picture.

Sponsored vs. Non-Sponsored
An important distinction that's present throughout the University of Minnesota's financial structure is that of sponsored versus non-sponsored expenditures. Much of the focus of financial matters within CLA is on non-sponsored resources, because these comprise the lion's share of the CLA budget, and these are flexible funds that the college can allocate to meet its priorities. Tuition and state appropriations are non-sponsored funds.

Sponsored funds or sponsored expenditures refer to funds where an external funder has given money to the University to carry out a project or function, most typically a research project. Most sponsored projects are awarded through competitive processes, in which a University researcher makes an application for funding for a specific project. The terms "sponsored" and "grants" are often used interchangeably to describe this type of funding. When a sponsor awards a grant to a researcher, the sponsoring organization has specific criteria and interests for the money, and is therefore not discretionary the way non-sponsored funds would be.

Across the University, there is considerable variation among colleges in the portion of the budget that is composed of sponsored funding. For CLA, sponsored funding covered $14.9 million of expenditures in FY 2012, out of a total all funds budget of $249.5 million (6%). By comparison, the College of Science and Engineering had $124.3 million of sponsored activity in FY 2012 out of a total all funds budget of $346.7 million (36%).

Sources of CLA Grant Funding
The federal government plays a large role in funding projects at research universities, and that is the case both for the University as a whole and for CLA. Of the $14.9 million of sponsored expenditures in CLA in FY 2012, grants from federal agencies covered $12.2 million (82%).

Grant Activity Among CLA Departments
Across departments in CLA there is considerable variability in the opportunities available to pursue externally-sponsored research funding. Within CLA, the Department of Psychology has been the largest recipient of grant funding, regularly accounting for over half of the sponsored activity within CLA in any given year. The following table shows FY 2012 sponsored expenditures by department.

Indirect Cost Recovery
Many external funders recognize that the University must maintain infrastructure that is essential to carrying out its research mission, and as a result, grant funds allow the charging of various types of overhead expenses to the grant. This charging is often referred to as indirect cost recovery (ICR), which as its name implies, is a partial recovery for the costs that are not directly related to the sponsored project, but are indirectly associated with it. These types of costs are also commonly referred to as facilities and administration (F&A), which comprise the main types of expenditures that are offset by these charges. The allowable rate charged for ICR varies across types of funding, and this rate is often subject to University agreements with its many funders.

In FY 2012, the college brought in $3.7 million of ICR revenue on its $14.9 million of sponsored expenditures. A portion of these funds are utilized at the collegiate level to cover costs associated with maintaining necessary research infrastructure and a portion of these funds are directed toward the relevant academic units to support the infrastructure needed at the department level.

Regents Professor Elaine Tyler May has received a Guggenheim fellowship. It will support her book project "The American Quest for Security, 1960 to the present." Read more

Regents Professor Patricia Hampl (English) will deliver the commencement address and receive an honorary degree from St. Bonaventure University (St. Bonaventure, NY) on May 12.

Associate Professor George Sheets (classical and Near Eastern studies) has received a President's Award for Outstanding Service. The award recognizes exceptional service to the University, its schools, colleges, departments, and service units.

Four CLA faculty members have received 2013 Council of Graduate Students (COGS) Outstanding Faculty Awards:

Assistant Professor Jane Gingrich (political science)
Associate Professor Eden Torres (gender, women and sexuality studies)
Associate Professor Marco Yzer (journalism and mass communication)
Associate Professor Hui Zou (statistics)

Associate Professor Shaden M. Tageldin (cultural studies and comparative literature) has received the honorable mention for the 2013 Harry Levin Prize, awarded by the American Comparative Literature Association (ACLA), for her book Disarming Words: Empire and the Seductions of Translation in Egypt (University of California Press, 2011). The 2013 Levin Prize distinguishes the best first book in comparative literature published in 2010-2012. The prize committee was "notably excited about the book's theoretical considerations of translation using the paradigm of seduction, as well as the brilliant case studies, with their sophisticated movements among works, languages, and cultures."

Associate Professor Howard Lavine's (political science) book The Ambivalent Partisan (Oxford University Press, 2012), won the David O. Sears Award from the International Society of Political Psychology for the best book on the political psychology of mass behavior. The award will be presented at the annual meetings of ISPP at Herzliya, Israel, in July.

By Brent Gustafson, finance director

Within the College of Liberal Arts, the delivery of the college's curriculum takes many forms. Tenured and tenure-track faculty members are a key resource that provide teaching, along with their expected research and service responsibilities. Beyond the faculty, however, the college employs contract faculty, instructors, and graduate assistants to deliver the curriculum. This column will look at this important aspect of CLA's finances and operations.

Single Allocation

The current fiscal year (2013) is the third year that CLA has delegated instructional resource management to the academic departments of the college. Prior to this time, CLA Administration played a larger role in determining teaching assistant staffing levels, course minima, and the numbers of sections of a course. Now, academic departments make these decisions based on their own identified needs and priorities and within the unit's instructional resources. The college still plays a role in consulting with departments about enrollment trends and best practices.

In order to fund these priorities, departments receive from the college a "single allocation" of instructional resources with which to deliver their curriculum. Known as "TA/UI" (teaching assistants/unassigned instruction), the single allocation is a bucket of resources with which departments hire the appropriate staff to either teach or assist in the classroom. The college also sets enrollment targets for units to accompany the allocation of TA/UI to help ensure efficient use of the money.

Instructional staff can also vary in the types of appointments fulfilling this function. Many of these roles are filled by professional and administrative instructors (P&A, approximately 400 this year). Beyond these P&A instructors, the college employs a large number of graduate assistants (approximately 1,000 this year). The role of these graduate assistants varies widely throughout the college, with some TAs serving as graders or assisting TAs, while other graduate assistants teach courses on their own. In any given year, approximately three-fifths of what CLA spends for instruction is for graduate assistants.

Trends

Over time, CLA has gradually decreased its spending on instruction provided by non-tenure/tenure-track faculty. The primary reasons for this decline are related to decreasing numbers of undergraduate and graduate students enrolled in the college. As noted in a prior column (see "What we control, what we don't"), enrollment in CLA has fallen by just over 1,000 students from fall semester 2009 to fall semester 2012. In addition to the decline in the number of students, CLA has also experienced a decrease in the share of credits taken by CLA undergraduate students within the college (see "A closer look at tuition"). In the 2008-09 academic year, CLA students took 73% of their credits within CLA, but that share fell to 66% last year (AY 2011-12).

With this decline in demand, CLA has experienced a lower need for instructional resources. Pulling back on funding this capacity has helped CLA make budget reductions in the face of continued budget pressures related to tuition revenue.

Effective and efficient use of TA/UI resources is one important way that departments help meet multiple goals for the college. Ideally, the curriculum within each department is attractive to students and enrolls well, in order to make good use of faculty instructional time as well as the time of teaching assistants and P&A instructors. Appealing to student interests and enrollment trends in turn helps the college's tuition revenue by drawing students into CLA classes, both from within CLA and also from other colleges.

Professor Tim Kehoe (economics) has been named the College of Liberal Arts Dean's Medalist.

Professor Ananya Chatterjea (theatre arts and dance), Associate Professor Alan Love (philosophy) and Professor Joan Tronto (political science) have been named CLA Scholars of the College.

Professor Ron Aminzade (sociology), Associate Professor Paul Goren (political science) and Associate Professor Saje Mathieu (history) have received the Arthur "Red" & Helene B. Motley Exemplary Teaching Award.

Regents Professor Patricia Hampl (English) has received the Dr. Matthew Stark Civil Rights & Civil Liberties Faculty Award.

Professor Andrew Oxenham (psychology) and Professor Barbara Welke (history) have been named Distinguished McKnight University Professors.

Professor Kay Reyerson (history) has been awarded the Robert L. Kindrick-CARA Award for Outstanding Service to Medieval Studies by the Medieval Academy. This annual award recognizes members who have provided leadership in developing, organizing, promoting, and sponsoring medieval studies through the extensive administrative work that is crucial to the health of medieval studies but often goes unrecognized by the profession at large.

Professor Donna Gabaccia (history) will be awarded the Theodore Saloutos Memorial Book Award of the Immigration and Ethnic History Society for her book Foreign Relations: American Immigration in Global Perspective at the Organization of American Historians meeting in San Francisco this weekend.

Associate Professor Jigna Desai (gender, women, & sexuality studies) has won the Association for Asian American Studies Excellence in Mentorship Award.

Assistant Professor Clint Carroll (American Indian studies) has been awarded a Ford Foundation Postdoctoral Fellowship for 2013-2014.

Graduate student Lalinne Suon Bell (creative writing) has received the 2013 Scribes For Human Rights Fellowship. The fellowship supports an MFA student to work with the Human Rights Program as a writer-in-residence. Lalinne's research and writing will focus on human trafficking in Cambodia. She plans to work closely with the Somaly Mam Foundation, an organization dedicated to the eradication of sex slavery in Cambodia.

Graduate student Anna Rosensweig (French & Italian) has been awarded a Charlotte Newcombe Doctoral Dissertation Fellowship from the Woodrow Wilson Fellowship Foundation. There were nearly 600 applicants nationwide and less than 30 recipients.

by Brent Gustafson, Finance Director

The budget for the College of Liberal Arts comes primarily from two sources--tuition (75%) and state appropriations (19%), and the vast majority of expenditures are for two functions--salaries and benefits for employees (54%) and "cost pools" (35%). This column will examine cost pools in more detail, highlighting what these costs are for and the various categories of cost pools we pay. For the current fiscal year, CLA will pay $90.2 million in cost pool charges. (See the first column in this series for more background on sources and uses of the college budget.)

What are cost pools?

Cost pools are a way for the University to pay for functions that are essential for operating the institution, but are not specifically associated with individual colleges. The types of expenses covered by cost pools are likely found at any major research university or other large organizations. Cost pools are a necessary part of the University's overall budget model, because all of the revenue in the University is allocated out to collegiate units, and it is not retained for University-wide expenses. These cost pools are a mechanism to finance University expenses by distributing costs to colleges.

Over time, the University has modified its cost pool model, and currently, there are nine separate cost pools paid by CLA. Each is distinct in what costs it is designed to cover, as well as how those costs are distributed out to colleges. The reason for these different methodologies of distribution is to seek a relatively fair manner of assessing charges.

The Nine Cost Pools

Below is a listing and description of each of the cost pools charged to CLA and our cost for FY 2013. Also included is information about the manner in which the costs are distributed to colleges.

Student Services ($34.9 million): this cost pool covers central offices and functions that support all students in the University, including admissions, student finance, and the Graduate School. The costs are distributed to colleges based on the numbers of students, so this is a large cost pool for CLA, and we pay the largest share of this cost pool given our size. There are actually four sub-categories of this cost pool in order to try to have different distribution methodologies for the component costs.

Technology ($16.0 million): many of the University's technology systems are managed centrally, so the costs of email, voice services, file storage, the Office of Information Technology, the help desk, and others are distributed out to colleges through this Technology cost pool. This cost distribution is on the basis of total number of students and employees.

Library ($13.1 million): the Library cost pool allocates the budget of the University Libraries out to colleges based on the number of faculty and students in the college.

Facilities Operations and Maintenance ($7.9 million): this charge covers the costs of building maintenance, waste management, custodial services, and grounds keeping. Costs are charged to colleges based on the amount of square feet that it occupies.

Support Service Units ($6.5 million): in order to fund the units of the University that have general support responsibilities, this cost pool charges out costs on the basis of total expenditures. Included in this category are things like the President's Office, University Relations, the Office of Human Resources, General Counsel, and the Office of Budget and Finance, among others.

General Purpose Classrooms ($3.9 million): as it sounds, this cost pool includes the functions associated with monitoring and maintaining classroom space on the Twin Cities campus, and it is allocated on the basis of total course registrations in a college.

Debt and Leases ($3.6 million): this pool includes the costs of centrally supported debt service and leases. Colleges are charged this cost if they occupy spaces for which the University is paying debt service. For CLA, Folwell Hall is an example of a debt-financed renovation for which we are charged costs in this pool.

Utilities ($3.6 million): while some utilities are charged through the Facilities Operations cost pool, most are included in this Utilities cost pool, including steam heat, electricity, and central air conditioning. Most utility charges are measurable by building, so over time, this charge has been more of a direct cost to units, rather than a proxy methodology that is present with most of the other cost pools.

Research Support Services ($0.6 million): the budgets for central units that administer, support, and monitor sponsored research activity are covered by this cost pool, such as the Office of the Vice President for Research (OVPR) and Sponsored Financial Reporting, among others. The costs are charged out to colleges based on a three-year rolling average of sponsored research expenditures.

Finally, it should be noted that the University's budget process has two distinct components that separate the units that are supported by cost pools and the collegiate units that pay the cost pools. The administrative (cost pool) units have an earlier (early winter) budget process to allow budget decisions to be made in time to reflect the impact on cost pools for the colleges. The colleges then know the impact of any cost pool changes when engaging with the University's budget process in the spring.

Professor Wayne Potratz (art) has been awarded the prestigious International Sculpture Center's Outstanding Educator Award for 2013. Thirty-nine educators were nominated and the vote in favor of Wayne was unanimous, according to the ISC press release. A reception to celebrate this honor will be held at noon on Thursday, April 25 at the Regis Center's In-Flux Space.

Professor Regina Kunzel (gender, women and sexuality studies) has won an ACLS fellowship and the Stanford Humanities Center fellowship. The title of her project is In Treatment: Mental Illness, Health, and Modern Sexuality, which explores the encounter of sexual- and gender-variant people with psychiatry and psychoanalysis from the 1930s through the 1960s

Associate professor Brenda Child (history and American Indian studies) has joined the board of directors of the Smithsonian's National Museum of the American Indian.

Associate professor Mary Franklin-Brown (French & Italian) has won the 2103 Harry Levin Prize, awarded by the American Comparative Literature Association, for her book Reading the World: Encyclopedic Writing in the Scholastic Age (University of Chicago). The 2013 Levin prize distinguishes the best first book in comparative literature published in 2010-2012. The prize committee praised the book for being impressively textured and detailed in its historical scholarship, and at the same time for posing urgent questions that have resonated across the centuries into our own internet era.

Associate professors Karen Ho (anthropology) and Kevin Murphy (history) have won the Award for Outstanding Contributions to Postbaccalaureate, Graduate and Professional Education for 2012-13.

Professor David Baldwin (music) is a member of the Summit Hill Brass Quintet, which is one of four artists selected to be Classical MPR's Artists-in-Residence. The groups perform, teach, and speak about music during visits to schools throughout the state of Minnesota. Listen to the quintet perform Divertimento, K. 136, Allegro by W.A. Mozart.

MFA candidate Kate Petersen (creative writing) has received the prestigious Wallace Stegner Fellowship in fiction. The two-year Stegner Fellowship at Stanford University is one of the nation's most prestigious creative writing fellowships, with about 1,700 applicants last year. Ten fellowships are awarded each year, five in fiction and five in poetry.

MFA candidate Adriane Quinlan (creative writing) is the first University of Minnesota student to win a prestigious Overseas Press Club Foundation Award. The $3,000 grant she received will fund an internship in the Beijing bureau of The Associated Press this summer. In her winning essay, Adriane wrote about theme parks in China, specifically, her own Beijing rite of passage: a trip to World Park.

Graduate student Jennifer Fillo (psychology) has won the 2012-13 APS Albert Bandura Graduate Research Award from Psi Chi.

Graduate student Emily Springer (sociology) was awarded a Thomas F. Wallace Fellowship for the 2013-14 academic year. This award is given to social sciences graduate students in their intermediate PhD years, to salute academic excellence.

The budget for the College of Liberal Arts is financed primarily by tuition (75%) and state appropriations (19%). These resources are then spent on CLA operations, primarily on salaries and fringe for faculty, staff, and graduate assistants (54%), as well as overhead and shared costs to the University (35%, known as "cost pools"). (See earlier columns of this CLA Budget 1001 series for more background.)

The revenues and expenses of the college are influenced by a variety of factors, and this piece is intended to briefly highlight that some of the factors are within CLA's control, while others are largely outside of our control.

What are the drivers?

At a very basic level, the two most significant drivers of tuition revenue to the college are the number of students paying tuition and the rate of tuition charged. As for the rate of tuition charged, this is a decision made by the Board of Regents, not CLA. The number of students in CLA also is subject to a lot of influences, among them:

• the number of new high school students admitted,
• the number of transfer students admitted,
• the number of students who transfer into or out of CLA from other parts of the University, and
• the rate at which students complete their degree programs and graduate.

The overall number of students in CLA has declined in recent years, with one result being a decline in the amount of tuition revenue.


The number of undergraduate students admitted to CLA is a decision made in the Provost's Office, and this decision is influenced by goals the University has for the size of the student body as well as the academic characteristics of the students admitted.

One other factor that can significantly influence the tuition revenue from undergraduate students is the individual course-taking behavior of each of roughly 14,000 undergraduate students enrolled here. The University's financial structure shares the tuition revenue between the college that enrolls the student and the college that provides the course instruction to that student. (See part 2 in this series for more on the University's 75/25 split.) In recent years, the share of credits that CLA students take within the college has declined (see graph below). This is the result of thousands of individual decisions by students.

Finally, the allocation of state appropriations among colleges within the University is the result of the annual budget and planning process of the University. (See part 3 in this series for more on state appropriations.) CLA participates in this annual budget process, but decisions about allocating state resources are made by the University's administration. The University's budget process considers the combined amounts of tuition and state appropriations when making resource allocations to individual colleges.

Within CLA's Control

While much of the revenue side of CLA's budget is subjected to external influences and not internally controlled, the college has more discretion on the spending side of our budget.

Over half of CLA's budget goes toward paying for salaries and fringe benefits for employees. This is not surprising, given the nature of any educational institution. Because this is our largest expense, it is also the area of most spending discretion. CLA makes its own choices about the number of faculty, the number of teaching assistants, and the level of staffing for administrative functions. The compensation levels for any given position is only partly within our control, as there are external influences as well, primarily market considerations, collective bargaining agreements, and University policies.

In contrast to undergraduate admissions, the number of graduate and professional students admitted is a decision made within CLA. The reduction in the number of graduate and professional students over the past few years (see table above) reflects both a drop in the number of new students matriculating each year and efforts to ensure students compete their degrees in a timely manner.

Effective management of the college's curriculum is a primary way in which CLA can both help control its costs and influence its revenue. CLA departments seek to offer courses that meet our mission as a liberal arts college and are part of a coherent academic program. Additionally, departments try to ensure that the number of courses offered--as well as the timing--help students meet degree requirements in a timely manner. Ideally, the curriculum within each department is attractive to students and enrolls well, in order to make good use of faculty instructional time as well as teaching assistants. Appealing to student interests and enrollment trends in turn helps the college's tuition revenue by drawing students into CLA classes, both from within CLA and also from other colleges.

CLA, like other colleges at the University, also has discretion over its use of "indirect cost recovery" (ICR) revenue that accompanies the receipt of many external grants. (A future column will examine grants and ICR revenue.) Additionally, CLA, in consultation with academic departments, sets its own priorities for fundraising from private donors and can partner with donors to direct these resources to collegiate priorities like scholarships and fellowships. Both ICR and donated funds, however, are much smaller sources of revenue than either tuition or state appropriations.