Why senator would cut 10 percent of MnSCU, U of M HQ costs

Today's Senate higher-ed committee hearing on the bill by Sen. Jeremy Miller (R-Winona) that would cut central office spending by MnSCU and the U of M raised the question:

Would the bill improperly micromanage the institutions?

Miller, an accountant by trade, has proposed cutting the administrative spending at both institutions' headquarters by 10 percent. Central office spending has grown more than spending on campuses, he said, and is second behind St. Cloud State in the amount of the budget it takes up.

He told the committee he has heard MnSCU officials testify that they've been able to cut spending by about 5 percent without hurting students. He said another 10 percent was manageable and would eliminate a lot of duplicated services -- ones that many campuses already do for themselves:

"We’re not abolishing the whole thing, we’re talking about a 10 percent cut. We do have CFOs and project managers on the campuses."

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But MnSCU CFO Laura King painted a picture of a central office that's already lean and aggressive in cutting. She said the chancellor's office have reduced costs 22 percent since 2009, and maintains a balanced budget. MnSCU is among the lowest administrative spenders in the country, with administrative costs making up 2 percent of the budget.

She told committee members:

"We are, by some measures, dangerously lean in administration."

About 4 percent of employees are administrators and managers, she said,

"...so it's not like there are thousands of people sitting in a building somewhere making administrative salaries."

MnSCU officials suggested that because items such as presidential salaries are already in contracts and paid for, mandating more cuts would force officials to make cuts in areas they'd normally leave alone.

A number of campuses rely on MnSCU for services such as legal help and capital project management. If they have to depend on themselves, critics of the bill said, mistakes could be costly.

Sen. Ron Latz (DFL-St. Louis Park) asked:

"What happens if we cut staff and tell campuses, 'We can’t give legal advice on contracts.' Our legal costs would go up exponentially. There’d be an increased burden on the attorney general's office, and hiring outside counsel would be more expensive by far." ,,, The first vendor contract that has a misplaced sentenced will cost an extra million dollars, and that wipes out the savings right there. There are broader system-wide questions that only the central office has expertise to understand."

King said she worried that more cuts would stunt the progress that MnSCU has made on its system-wide technical services to students, which she said makes up about half of the chancellor's office budget.

When asked where further cuts would come from, she said services that help the system handle labor contracts, grievances, the payroll process, manage bank relationships -- "that would go next."