Friday, March 19, 2010

The $132.3 million "budget challenge"

Yes, we are facing major challenges at the University of Minnesota--in the administration's infelicitous choice of words, we face a $132.3 million "budget challenge." The administration wants to blame it all on the legislature and the governor. And certainly the $32.3 million unallotment from the governor was unanticipated. What the administration does not want to talk about, however, is how it is responsible for a large chunk of this shortfall. Of the remaining $100 million shortfall, much was foreseeable. And they did not plan for it or they actively created it.

The cost of the 27th pay period, $41 million, was a foreseeable expense that cannot be explained by recent cutbacks in state funding. CFO Pfutzenreuter told MPR: "We've talked about it on numerous occasions over the last couple of years, but we're a complicated place and I think the communication isn't always as good as it could be. We knew it was coming." The 27th pay period is almost one-third of our $132.3 million “budget challenge” for the coming fiscal year (or 41% of the “internal” component of that challenge).

The $41 million figure touted by the administration also invites additional scrutiny. How does the administration arrive at that figure? Total payroll for the U is about $1 billion, and $41 million times 26 pay periods is just over $1 billion. Yet the 27th pay period, according to the administration, should only affect those on 12-month appointments. Many faculty are on 9-month appointments, and many staff are paid on an hourly basis. The numbers don’t add up. (We will set aside my views on the necessity of giving those on 12-month contracts an extra-paycheck, since I anticipate that it will upset some of madradprof's colleagues who are on those contracts. But suffice it to say that 12 months does not equal 52 weeks but a little over 52 weeks. The 52 weeks=one year is an artifact of the U's stupid payroll system. Switch to bi-monthly paychecks and this problem goes away.)

The two per cent compensation pool composes another large chunk of the "budget challenge." The faculty and deans have sent a clear message to the administration. In a fiscal situation in which furloughs and layoffs are occurring, we have no business giving raises. (Of course, the two per cent will be distributed differentially, so most folks will see much less than a two per cent increase.) At the very least, the administration should be open to the possibility of letting departments choose to reallocate the two per cent internally in order to avoid laying off staff and to sustain instructional activities.

The 27th pay period plus the compensation pool add up to about half of the internal component of the “budget challenge” and would have been about 60% if the administration had not delayed the application of the raises until January. These were foreseeable expenses.

1 comment:

  1. The 27th pay period is a fiasco and just what you might expect from the Morrill Hall Gang - the same people who brought us EFS.

    Clearly not doing something about this in advance was a major mistake. Someone who pulled a stunt like this at 3M would be out of a job.

    Why should we trust the same folks to do the right thing with respect to finances in the next few years?

    Can you say MoreU Park? Can you say two million dollar Coffman renovation? Yes, I do mean that building that recently underwent a major overhaul. Can you say Weisman addition? Can you say Northrup re-do?

    And note, Northrup does need work to come into compliance with code, but the Cultural Czar does not need a new empire - at least not right now when we

    Ah, but the Morrill Hall Gang will tell us that these are investments. Providing the citizens of the state with an outstanding education at a reasonable cost is also an investment. Something that the Morrill Hall Gang has forgotten.