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Moorhead, MN 56563
Preparing MSUM to Survive
and Thrive in the New Normal Higher Education Landscape
December 15, 2009
The major topic for today’s town meeting will be
planning for the New Normal in Higher Education at MSUM. The
New Normal is a term that refers to the post-recession
challenges in higher education. For more information on the challenges
of this unique time, we have posted two documents from the American
Association of State Colleges and Universities on the Strategic Planning
portion of our website at
. Summing up the challenges, we have two competing points:
- The percentage of public funding of
higher education in relation to tuition is decreasing
steadily and will not return to pre-recession rates.
- Public higher education remains
critical to the economic growth of states, regions, and
Thus we are challenged to meet critical economic and
societal needs with fewer resources.
Today’s topics will focus on the New Normal
at MSUM and how we are preparing to survive and thrive. To that end, our
- MSUM Budget Context
- Assessing Current Preparedness for
the New Normal
- Working Together to Increase
- Focusing our Efforts with a New
Strategic Plan and Annual Reporting Format
MSUM Budget Context
This past year, everyone worked together to reduce expenses and save
jobs. It worked. We closed a 14% budget gap through a combination of
reductions of expenses and increases in revenue.
More than half of our budget gap ($4.95M) came from a
structural deficit resulting from our base budget commitments exceeding
our revenues. The good news is that we have in place hiring controls
that link spending to revenue and we have begun to invest in admissions
and marketing to increase revenue. Thus, we should be able to avoid
future structural deficits. The bad news is that the state
appropriations continue to decrease necessitating continued decreases in
base budget and increases in revenue. As we have discussed, plans are in
place to address this challenge.
Last Fall (the start of FY 09), our state
appropriation was $29,820,431, and it accounted for 48% of our overall
general fund budget. This Fall, our appropriation was down 10.95% and
accounted for only 41% of our general fund budget. The appropriation is
expected to further decrease 1.77% for next Fall and then 15.33% by Fall
of 2011. By that time, the appropriation will have fallen over 7.7M, and
it will only account for 35% of our current general fund budget. It is
quite possible that these decreases may be further complicated by
rescissions or unallottments.
As a result of the decreases in appropriation, we must
increase our revenue in order to maintain our programs. Tuition revenue
now makes up more than half of our general fund budget, and its
percentage is increasing.
Each student we enroll can be considered as a
multi-year annuity. New entering freshmen give us much more than one
year of income, or, as was the case with the drop in this year’s
freshman class, multiple years of loss. This year’s class, which was
recruited before the changes in admissions and before our new marketing
efforts, was down 173 students from the previous year. The tuition
revenue lost for just this year was $1,009,282. Considering retention
and graduation rates, we will lose an additional $1,917,929 over the
next three years.
I have provided the tuition illustration for two
reasons. First, our new investments in marketing and admissions are
needed to assure that we can reverse these losses and gain 6% in overall
enrollment by Fall 2011. Second, we know that once we get them to campus
we are more likely to get them to enroll. Our programs are strong, our
faculty and staff are outstanding; and our facilities are well
maintained – even with considerable personnel shortages. Please know
that the role you play in recruitment is most valuable.
Assessing Current Preparedness for the New Normal
Thanks to your hard work, we are further along than many other
universities in our preparation for the new normal.
We already have decreased our base
budget through hiring freezes and applied our federal
stimulus dollars to further base budget reduction
through early retirement incentives and energy refits.
In fact, we are being recognized by the City of Moorhead
for the extent of our energy refits thus far.
We have begun to rev up our revenue
engine through investment in admissions and marketing.
Initial data on applications suggest that this
investment is working.
We have reviewed all of our academic,
support, and administrative programs. Programs with low
cost recovery ratios are in the process of making
necessary changes. Some reorganization has occurred in
support programs. More is needed in both support and
We have increased the focus on key
indicators such as cost recovery ratios, retention
rates, and graduation rates, and published these
indicators on the web. The annual report format of the
new strategic plan will continue and increase the
emphasis on key indicators and transparency.
Working Together to Increase Preparedness
Although we have already accomplished much, and I know many of you are
tired, we still have more work to prepare to not just survive but to
thrive in the new normal.
First, everything we do must build on
the following principles
We must continue the
focus on the quality of our educational
programs while also assuring that these
programs are cost efficient.
We must empower our
employees while also holding them
Our efforts must be
transparent and we must communicate
regularly with the campus.
If we stay on track, I believe we will
have made most of the transition by the end of this
Although some units practice
accountability and empowerment, others need some help in
those areas. To that end, we have provided supervisory
training and will continue efforts to promote effective
communication, empowerment, and accountability
throughout the campus.
Because we will have fewer employees,
we need to examine all of our structures and processes.
We cannot do everything the same way with fewer people.
Thus, we will need to reengineer our basic processes
(e.g., business office, records and related data
processes, campus activity scheduling, building and
grounds maintenance). We may drop some activities and do
others differently. Our staff and faculty will play a
large part in the reorganization of our structures and
processes. Please know that we will provide
opportunities for employees to learn new skills if their
jobs change as part of this effort.
We have arranged for the LEAN Center
at Winona (http://www.winona.edu/lean/)
to provide their facilitator certificate training on
campus in January. These facilitators will work with
teams of staff (e.g., the records office and IT staff)
to examine key work processes (e.g., course scheduling,
student registration) and determine how they might be
streamlined. Please know that this effort is not limited
to specific offices or units. Any unit or department may
Karen Mehnert-Meland has agreed to
serve as in Interim AVP to coordinate this process
reengineering across divisions. This is a temporary
position to help us through the coming approximately 6
months. Please let her know if you would like to
volunteer for training and if you have processes to
recommend for examination.
I have asked Interim HR Director Herb
Trenz to examine all vice presidential portfolios and
divisional structures and recommend changes as needed.
If you have any suggestions or concerns, please feel
free to contact Herb (email@example.com).
We may end up with a few more
administrators or possibly a few less. My goal is to
have the structures to promote accountability,
empowerment, quality, and fiscal sustainability so that
we have a stable foundation on which to strategically
invest for the future.
Starting next week, I plan to hold
office hours at least once a month and biweekly if
possible. I invite you to visit with your suggestions
and concerns. We will post the times through an official
We are a very strong university! We have high quality
academic programs coupled with faculty and staff members who care about
students and about their university community. Through your continued
efforts, we will thrive in the new normal.
I know that this has been a difficult time for all of
us. However, I do believe that by the end of summer, our processes and
structures will have evolved and we will be able to strategically invest
in our bright future.
Focusing our Efforts with a New Strategic Plan and
Annual Reporting Format
As we noted in the official email, the strategic planning committee has
worked all semester to refine a new strategic plan for the university.
As required by our System, this plan aligns with both the MnSCU plan and
our new mission and vision statements. It also features an annual action
plan and will be accompanied by a public annual reporting process
managed by the University Planning and Budget Committee. The three
components of the plan (context, initiative and indicators, and 2010
action plan) along with the MnSCU plan can be found on our budget and
planning webpage at
At this time, we welcome any questions or suggestions.
We hope to finalize the plan by February.