University of Minnesota to trim admin costs by $15 million a year

We’re trimming (Alex Friedrich)

University of Minnesota President Eric Kaler wants to cut $90 million in administrative costs over the next six years.

He told the Board of Regents today he wants to cut $15 million a year, starting this year. He wants to use the money for both non-administrative activities — such as teaching and research — and to curb the increased cost of attendance for students.

The $15 million each year represents more than 1.2 percent of the U’s administrative budget.

“That is an ambitious … but achievable goal,” Kaler said. “My hope is to underpromise and overdeliver.”

Two outside studies done earlier this year will help U officials decide how to streamline.

Echoing one consulting report, CFO Richard Pfutzenreuter says the U needs to centralize a lot of its services, be shrewder in how it buys supplies and equipment, and cut paperwork through computerization. Another consulting report also suggested the U review its management structure.

He says U officials hope to reduce personnel through attrition, but couldn’t rule out layoffs. He said he wasn’t sure yet how many people could be laid off.

Regent Thomas Devine called the plan “well thought out.” He told the board, “This is freeing up funds for further investment in the institution in other, many very important areas, to make us a leader here in the state, and I think to set a tone within higher education overall across the country.”

Regent Peggy Lucas said, “Ninety million is a gasp. But I’ve heard enough today to believe that we can do this without sacrificing excellence.”

Legislators demanded last winter that the U submit reports on its administrative spending and analyze how it compares to peer universities. Those demands came after a Wall Street Journal article in December said the U led the country in the number of well-paid administrators on its payrolls.

Pfutzenreuter said Kaler had made plans to cut administrative costs long before the article appeared.

In a separate report, university officials said the salaries of its senior leaders are at or below the level of their peers at other schools.

University officials say the U has reduced administrative costs by $32 million a year over the last couple of  years.

It saved another $2 million in one-time costs.