(00:00:00) And the time is 12 o'clock. Good afternoon. I am Marlene Johnson lieutenant governor of the state of Minnesota and a member of the Minnesota meeting. We also extend we it's a pleasure to welcome all of you to the Minnesota meeting today. And we also extend a welcome to the radio audience throughout the Upper Midwest who are hearing this program on Minnesota public radio's. Midday program the broadcast of Minnesota meeting is being sponsored by the Oppenheimer wolf. Donnelly Law Firm, Minnesota meeting is a public affairs form which brings National and international speakers to Minnesota members of the Minnesota meeting represent. Our communities leaders from corporations government Academia and the professions Minnesota meeting is pleased today to present our speaker Ed Spencer talking on the University of Minnesota who manages and who governs In March of this year Governor perpich asked Ed to had a special Blue Ribbon commission to analyze and make recommendations on the financial management of the University of Minnesota. As you all know, the university one of our most important institutions and Assets in our community has had its credibility its management and its governance question during the last 12 months. Mr. Spencer will review the findings of the commission. The commission met in 10 public hearings hearing testimony from more than 40 people both inside and outside the university. It made its findings and recommendations recommendations public yesterday morning, and mr. Spencer is here to share them now with us today. I think you'll agree that minnesotans were very fortunate that Ed agreed to head the commission. He is an individual of high qualifications. He is Chairman of Honeywell ink and was CEO of the company from 1974 to 1987. He is a director of CBS Inc and the Boise Cascade company, he serves as chairman of the Board of Trustees of the Ford Foundation. He's a member of the Board of Trustees of mayo foundation and the Carnegie Endowment for International Peace. He served as a member of the presidential appointed Japan US economic relations group from 1979 to 1981 which advise The Carter and the early Reagan administration's on long-range economic relations between Japan and the US and he currently serves as a Reagan administration appointee on the advisory committee for trade negotiations. Mr. Spencer was an officer in the US naval Reserve graduated from Williams College in 1948 and spent two years as a Rhodes scholar at Oxford University in England. Following his presentation today. He will respond to questions from the audience. So I'd encourage you to use the cards at your table to jot down your questions and for discussion Steve Young the an attorney with the firm Winthrop and Weinstein and former dean of the Hamline law school and Jane Mara SEC executive director of Minnesota meeting will move among you to manage the question and answer session. It is now my sincere pleasure to present to you at Spencer. (00:03:30) Thank you very much Marlene, you know, I was one of a small group of people who had the pleasure of starting the Minnesota meeting seven years ago, and it never occurred to me then or since that I'd have the chance to talk to this luncheon group today. So it's with added pleasure that I will share with you some of our work at the University of Minnesota. First a a comment about the background of the commission as you recall information surfaced through the Minnesota daily actually about overruns on the renovation and modernization of the East Cliff home of the president of the university the legislature had been chafing somewhat for a period of time under what they looked upon as loose financial management and controls at the University and they took the opportunity to send in the state auditor the state auditor audited the overrun and found in the process that there were going to we're going to use some reserves to pay for part of the overrun and then it surfaced of course that the reserves and the overrun we're not properly approved that the Board of Regents weren't cognizant of what was happening the Press got into a almost a Feeding Frenzy of excitement not always with great accuracy. I must say and as a result of all of that the Decided that he had to politically take some action by appointing a commission to look at these problems. But also I think he's had a genuine interest in a long-term. Look at Minnesota's higher education system. And this was an opportunity perhaps to get a start in that direction the commission of twelve of us were selected by the governor's office in myself, but I can say that I had the final word on every single member of the commission and as you look at the names in the commission report, which I think will be available after the meeting outside. You'll see that almost all of them were had some connection with the business world because our our charge was to look at the financial management and planning at the University and not to look at the academic side of the institution for which we obviously aren't competent. We brought in some Consultants after a competitive bidding process Cooper's the library at one that and part of their report a summary is in the appendix to the complete report of the commission their total report. However is the document that's about four inches thick and has hundreds of pages of very very thorough and detailed recommendations about the financial management side of the University as we got into the work with Coopers and library and we decided that we wanted to be very sure we weren't looking at the work from a corporate perspective and we got the chief financial officers from Michigan and Stanford to join us as senior advisors. They oversaw the Coopers & lybrand work and they were able to assure us when we were finished that what we had produced was indeed in line with accepted university practice. As we got into the financial management problems of the University became very quickly clear that governance was also a problem in the institution the relationship between the Regents and the president and his administration were not good and the governance system in effect in broken down. And that was one of the reasons that these Revelations came to light to help us analyze the governance system. We went to three very wise very experienced and very well-recognized former presidents and chancellors of universities Harold Anderson from Ohio State and before that Cleveland State University Arthur Hanson who had been president of both Purdue and Texas A&M and Bill Friday who came up through the North Carolina system and was Chancellor of that system for many many years and helped turn it into a great University system and these man contributed a 30-year so page report on governance, which is an appendix to the commission report and He was interested in governance at any public institution or private for that matter ought to read the report of those seniors advice senior advisors. It's just outstanding as we got into our work. Of course, we had to rely very heavily on information and support and advice and consultation with the university itself. And I would say that we had an absolutely open access to the university presidents. Our was immensely Cooperative from the very beginning his financial and administrative staff were a very cooperative and forthcoming and we couldn't have done our work without the complete support and help of presidents our and his staff at the University. Let me just say a word about the university itself before getting into the details of our report. We of course have a land grant University which means we have a mission to perform in educating the young people of Minnesota and also providing support to the economic development of our state and this university has done both of those things very well and there are a lot of examples that could be cited to show that and of course the second thing is that the university is at the peak of a system which starts with vocational schools community colleges the State University system, and at the top is our great research University and its campuses here in Minneapolis st. Paul Waseca, Crookston, Duluth and Morris The size of this University is awesome. 55,000 full-time students on six campuses 7,000 faculty members. It has 2.7 billion dollars in assets which it would place place at a hundred thirty-two and the fortune list of 500 if it were on that list, the annual budget is 1.2 billion for operations and another 300 million for Capital renovation and construction and about a third of that budget is funded by the state legislature through the appropriation process. The rest comes from tuition and fees a lot from Grants income of the hospital and so on about a hundred eighty million dollars of that budget come through research grants. Incidentally. It's one of the leading Grant receiving research institutions of higher education in the country. And of course, it's just completed a 375 million dollar Capital fund drive on heard of in public institutions before that and it has as a result of that about a hundred and 187 fully endowed fully financed new chairs to a point that's a tremendous asset for a new president coming in to have that Capital Drive of been so successful and a great feather in the cap of Ken Keller incidentally who was the real person who led that drive with his supporters from the alumni and the business world and the faculty incidentally who contributed 11 million dollars to that drive. Here's a figure that really puts the university the management function in perspective. The university has to manage more square feet of floor space than the combined downtown Office Buildings in Minneapolis. And st. Paul. Well, he had all of those numbers and a lot more up and you have to say that the administrative financial management side of this institution is no small part of the responsibility of the people who run it and our job, of course was to address that management problem and see if we can make some recommendations for its approvement. One of the issues that came out very early on and I want to address it up front because it is so important. We got into the issue of autonomy. Our University was founded prior to the State Constitution under the constitution of Minnesota. It has the authority to be governed by its Board of Regents, which of course is elected by the legislature, but it is autonomous with regards to the state of Minnesota. Once at those regions are elected and that is a great Plus for any University because it means that the political apparatus in the state cannot reach into the university and direct its operations any University that has interference from the political side in this country is a university that does not rise to the heights of the great universities like Michigan and our own and the Californian the North Carolina systems and some others But there were signs just the very fact that the governor appointed. Our commission was a sign that the political side of the state was not satisfied with what was happening and we're beginning to poke their nose into what was going on at the University, but we found that there's a great difference between autonomy which is essential to assure the attraction and the maintenance of a very high quality faculty and to assure the independence of the educational institution a lot of difference between that autonomy and accountability and what we say in our report is that autonomy is something that we should take great pride in we should insist on it. It's in the Constitution. It's been supported by the state supreme court and we as citizens of Minnesota should be very sure that that autonomy is never attacked by the political side of this state but thirty percent or thirty three percent of the budget coming from the legislature. The university has to be accountable to that legislature for the funds that had received It has to be accountable to the citizens of Minnesota for its performance and it was on the accountability side. That the University was not living up to the standards that we think it should have set for itself here in the state as we looked into the financial management of the institution. Here are a few of the findings that we got into. First of all there was a decided lack of an effective budget and control system. There was little feedback on whether the funds that were allocated by the state where spent accordingly there was very good recording records and kept of the cash management the investment management outstanding work was done on that side on the balance sheet, but once the funds were there and allocated out to the departments in the schools and the campuses not a good feedback control system that enabled the administration to know how those funds were actually being spent very little time Lee reporting on on expenditures months after the end of a fiscal year would pass before some of the major Departments of the They knew exactly what they had spent in the prior twelve months and this makes decision making of almost impossible. The result. Of course is that the various departments and schools created their own management Control Systems. They have their own personal computers and their own software and there's a proliferation of this throughout the university and but it is not being helped by timely information from the central administrative Department. I should also say in passing that the Health Sciences department at the University hasn't had a health science of school as an outstanding internal management and control system, which is partly a function of the need to provide accurate accounting and cost control and management in return for receiving government grants behind the fact that the control and management financial management system was not functioning properly the fact that the university has a very out of date data processing system average saw a J.G. Of software systems used within the information system overall or 12 years some systems are 20 years and many are 15 years old and we of course said that the university would need something like 12 to 18 million dollars of funding and probably take as long as five years to complete the process of bringing their information system up to something above the average of great universities not even up to the Stanford and Michigan level and we urge them to get started immediately with the planning process, which will also cost money half a million to a million dollars in might take six to nine months. But so that by the time the university is ready to look at the budgeting for 1990. They will be able to say to the legislature to their various departments and to the public in Minnesota. Here's the plan that we've got in place to correct this out-of-date financial system incremental budgeting was the way of budgeting at the University instead of starting 0 base or building the budgets up from the bottom. There is a tendency to say well we think Can get a certain percentage increase next year and everybody would increase their their budget certain percentage that's under the way under the way of underway to change at the present time. Also, there was never put together for the regions or the legislature a comprehensive over all-in-one budget which showed the total amount of spending there was a tendency to look at what was needed from the legislature and that was a piece that was discussed there but not as part of the total budget that were included all the other funding sources in the University. There's a big deferred maintenance of plant and Equipment That's Not Unusual and University Systems because obviously the funding for maintenance of old things is now is always in competition with the important funding for the academic side of the institution and this is common elsewhere at all. We do is say it is a problem and it's something the university ought to think about rather than let their plant and Equipment run down to the point where it has to be torn down and rebuilt its substantial cost. There was a lack of a Follow up in the internal auditing system failure to follow up suggestions and the annual letters made by the external Auditors. There was a need to build a much better and more competent trained staff and to add to grow that staff in the accounting and financial side of the of the University. Well, we've made a number of very specific recommendations we have about total I think of 25 Pages or so a very specific recommendations to correct these Financial shortcomings, the university knows what needs to be done. A lot of it is underway already a lot more needs to be done. And I think our role was to bring all of this into one report to get the which was supported wholeheartedly by the financial administrative staff at the University and to let the legislature and the people of Minnesota know that to bring this financial. Side of the university and do the kind of management and control that it needs to have in an institution of the size. I just cited is going to take time and it's going to take money but the process of Correction is well underway. One of the things that needs to be done is the immediate appointment of a experienced and highly capable Chief Financial Officer. There is a very competent acting Chief Financial Officer at the moment and we've also recommended a separation of the administrative tasks and appointing a highly competent and experienced chief administrative officer to deal with all of the huge problems that go with Personnel plant and equipment and so on. and finally, we think that the legislative the legislator should receive from the University and the university and turn through the through the administrative staff the president of the Board of Regents a detailed schedule and outline of what's going to be done so that the university can indeed say here is what we're going to be accountable for and here's how we're progressing to accomplish that A second area we addressed rather briefly dealt with the organization of the institution because there was a report by peat marwick in 1986 which was rejected in our opinion rightly incidentally by the administration at the university the report recommended putting sort of a chief executive at the top with presidents of each of the campuses including the Twin City Campus. We recommended against that we think that puts an extra layer of management in and and this is a university which is Way loaded in terms of size Prestige budget faculty Etc in these in the research campus and the undergraduate schools here in the Twin Cities and we think that to we don't want to inject another person in charge of that campus. We think the president of the University should also be the head of the Twin Cities campus has but we recommend a much improved communication line between the between the the president and the other campuses bringing the Chancellor's of the other campuses in at earlier and more effectively in the budget process in the planning process and their academic people. Of course in with the academic people from the Twin Cities campus in the academic planning and presidents our has already got a lot of that underway. He spent a lot of time touring the state talking about the university and bringing the Chancellor's into an effect a cabinet to run the whole system. the third part of our report and I think in many ways the most important part deals with governance, and I'm rather than just speak from notes on that. I just I think I'll just read a few things that in our recommendations that I think stand out and in the governance chapter. We divided our recommendations into three parts. The first part is a recommendations that we make specifically to the Board of Regents in the president. An arm's length our adversarial relationship cannot be allowed to develop between the board and the president the two must work together as an effective and mutually supportive team. Secondly. We think that the chairperson of the board should be the only spokesperson for the board. We're all in favor of having descent and vigorous debate and argument until decisions are made but once the decision is made they should be so the decision should be supported by the full board and should be articulated by the chairman of the board. We found that the Board of Regents was not given proper information to prepare for as meetings and we urge that the president do a better job of preparing concise understandable reports for the board and reports that emphasize the policy matters that the board should be involved in and not the massive amount of detailed information that now goes to the board and contributes to the board's interference or not really understanding the difference between setting policies and the management responsibilities of the executive officer We strongly recommend that the board not establish its own staff. The board has been somewhat frustrated because it hasn't gotten information and easily understandable ways and a number of members of the board of which they had staff that could help them analyze that information and it was even suggested in a legislative bill that they have their own staff where opposed to that we think the presence of a staff reporting to the board not the president drives a wedge between the board and the president and can become a conduit for information going to the board and not and bypassing the president. We thank the president and the Board of Regents are one and the same they are they represent the institution and if the Regents aren't getting proper information, it's because it's not being prepared properly by the president and his staff and if that were done properly then the need to have a separate staff would go away. We think that the president has to improve Communications between the university and the citizens of Minnesota. There's a lot of myths there was a lot of misunderstanding About the commitment to focus and and about the financial problems of the University. Unfortunately, as I mentioned six hour has gone a long way to help he recognized that immediately went out to do something about it. We think the president's and the Regents should set a very rigid standard to implement the financial recommendations that we've made a schedule a time table assign responsibilities and be measured against that schedule which in turn would be presented to the legislature. We thank that orientation and training of Regents is essential. We don't think that has been done well enough and continued education of Regents who obviously represent a broad group of the citizens of Minnesota aren't specialized in working on the boards of public universities and we think a lot of educational work needs to be done and should be very helpful to the regions. And we think that the university should set a guideline or a code setting forth of the policies under which the Board of Regents functions the relationships between the regions in the president so that there is some way in which the regions in the president particularly the board can measure its performance against what it has been agreed upon that it should do in governing the University. We think that the the appointment as a result of the passage of legislation and the hard work of some people in this room of a regent candidate advisory Council was a very good step in a direction that needed to be taken and that counsel under President Mill George of st. Olaf College is hard at work and has several important responsibilities, which we point out and urge them to get on with the job properly and most important. We urge the legislature to accept the recommendations of that advisory Council when it completes it work. The council has to describe the Region's duties which fits back into the code and which incidentally much of our senior advisors report addresses and the other is to establish the criteria for romek for recommending election to the Board of Regents. And then the second part of the back of the responsibilities of the advisory council is to recommend a slate from whom the legislature can't Regents 224 candidates for each of the openings that come up for election and I think there are four openings on the Board of Regents next year. The and we say in our report that the candidates recommended to the legislature for election represent all of the people of the state of Minnesota. They may be from Geographic districts. You certainly want diversity in race and sex and economic background in in job experience and public experience. But what we do say is that one selected these people represent all of the people of the state and not a particular interest ideology region or community. And finally, we have some specific recommendations to the state legislature the first one and the one that I alluded to in the beginning and I will repeat the legislature must be careful to distinguish between the autonomy of the University guaranteed by the Constitution of the state and the accountability of the University do the people of our state. The commission recommends that the legislature hold the Board of Regents responsible for accountability to to the state but that the legislature exercise Extreme Caution and any consideration that might impose restraints on that autonomy of the University commission feels strongly that the ultimate responsibility for the performance of The Board of Regents rests with the legislature that elects the individual regions if the legislature aren't satisfied with the board that they have elected it's their fault in the legislature not the fault of the Board of Regents the commission recommends that the legislature further evaluate the region selection process, which is now subject to the change that I mentioned after this 1989 election of new Regents is completed to see if there any additional improvements that should be made or changes and we specifically recommend that the Regents be limited to two to six year terms. Frankly, not many Regents want to serve beyond that anyway, because it's such a time-consuming and tiring and fatiguing and battle-worn kind of a job and the job of being a region incidentally in my personal opinion. Not not the commission report, but my personal opinion could be made much more attractive. It's an important a very important job in this state and by changing the way in which the board functions by focusing on policy instead of operation and detail separating management from policy, perhaps reducing the time of the involved in the Regents in in their functioning. It could be made a very important a very attractive job for people as well as being what it is a job of great Prestige and great importance to the state of, Minnesota. And finally a subject that my friends in the Press were very vigorous and challenging us on yesterday. We recommend a modification in the state Sunshine laws, certainly the openness with which we deal in the political arena in Minnesota is a very valuable asset for this state and one that must be preserved but there are certain things that inhibit the functioning of the university and the university would function a great deal better. If in the selection process for a president, the Regents could meet in private just the Region's to discuss the pros and cons of the candidates for the president and finally in the evaluation of performance of both the regions and the board and the president which we think is a necessary part of the functioning and enter governance system. If that evaluation could be conducted in private by the full board away from the away from the lights of television and the presence of the press. There's an awful lot going on that is good at the University of Minnesota. It's an interesting thing. It's a university that is looked upon in the state as our University. We all have a stake in it. We all like it we all worry about it. We all work for it. We all want to see it be a great University. It's a university incidentally that in my perception and the perception of many more knowledgeable people in myself may have slept modestly over the last 20 years relative to its peers. But we also are a state that sits around and criticizes that University we criticized it for being elitist. We criticized for not communicating we criticize that for all the things that we found in its budget and financial system and all of these things are correctable. So some of those mistakes that were made were human mistakes to which all of us are entitled once in a while the responsibility for correcting those mistakes for following the recommendations that we make in our report the responsibility rests with the university itself with the And it with a staff and with the Board of Regents and they know it and they're working hard and diligently to overcome these problems that have been so highlighted in the last in the last year. The commitment to focus is absolutely important for our University call it what you may the concept of taking our top-of-the-line Peak research University and making it into a truly great research University, which was the vision of Ken Keller and others who helped put that program the commitment to focus together. That's absolutely essential the land grant mission of educating all this people of Minnesota who want to get a university education or a college education is well met by the university in part but also by the rest of our higher educational system as well. What we need is a top-flight research University that can hold its own with a very best in the country and it's an essential part of the development of this state which after all is a small state with only A million people competing with other much bigger Educational Systems and much bigger states have more money to put into their universities. So we've got to focus our University down and doing some things extremely well, and that's what I believe the commitment to focus was all about. There are going to be funding needs to meet the objectives of the University. They're going to be funding needs to meet the recommendations that we make and I think it's important that everyone in this state understand that if we are to have a great University, we're going to have to spend the money to have it and I hope we're going to be willing to do that. And finally, let me say that I think the the opportunity for the new president is just unparalleled. There's nothing More satisfying in running any kind of an institution big or small and coming into a situation where things aren't going very well and have the opportunity to make the much better in our new president has that opportunity? He's got the successful Capital fund Drive behind him. He's got a climate here in the state of Minnesota. That is just waiting for him to take charge and move that University had the way it should be. So I think it's a it's a wonderful thing that as we go out of 1988 a year of turmoil and confusion and some tragedy for some individuals that we're not only we have the guidelines down for the future of that University. We have the the academic priorities approved by the faculty of the and the Regents 222 launched the commitment to focus program and we have a marvelous new president who can carry the university ahead and with that I'll entertain questions. Thank you very much. Mr. Spencer again for our radio audience. We are at a Minnesota meeting with mr. Edson Spencer the chairman of Honeywell ink and the head of a group which is just made a report on governance at the University of Minnesota as usual at these meetings. (00:33:05) I and J mrazek will take your questions and if you could just signal (00:33:09) me, I'll come over to you with (00:33:12) the mike first question right here from John Herman. (00:33:16) Who is going to choose this committee to approve the Region's? How's it going to be chosen at was elected by the legislature? It has already been elected by the by the state (00:33:27) legislature. (00:33:34) Mr. Mr. Spencer. Well, if I could ask you a question, (00:33:37) it seems that in Minnesota. We have two values which are very important to us. (00:33:41) One is educational Excellence. The other however is a tradition some would call it a populist of (00:33:48) making sure that the average person the common person (00:33:50) participates fully in public life. And in the (00:33:53) life of the state, is it possible that these two principles are inconsistent that it is that you cannot Square true educational Excellence with political (00:34:02) populism. No, I think they this is a populous state and I think we've got to look at our educational or higher educational system in this state as one big entity which serves a lot of functions and as I pointed out it starts with the two-year vocational schools that has the two-year community colleges the four-year state college system the various campuses of our University and the university itself and within that total system. The opportunities that you're talking about a providing an education for everyone in Minnesota who wants it I should add incidentally we have things like Metro State University. We have the extension schools and the night schools and all the rest of it for adult continuing education. So on there's a lot of opportunity for people to be educated in the state. But if we tried to put all of that in one University of Minnesota and require the Twin Cities campus and the other campuses of the University of Minnesota to do it it would flounder. It may not afford to do it. Thank you a question from over there Gene. (00:35:02) And how did your committee feel (00:35:03) about the size of the Board of Regents? We did not address that subject. It's it's been 12 people for quite a while and that was not a problem. (00:35:13) A question here. (00:35:15) I haven't had the benefit of reading the report but assuming that the university is constitutionally insulated from interference by the legislature. The Board of Regents is and on the other hand assuming that the Regents are going to limit themselves to policy matters. My question is who was ultimately going to be able to criticize or remove a president or any other officer who is not properly handing the financial matters associated with the universe all the Board of Regents, obviously hire and fire the president that's perhaps the most important function of the board and they would that's that no matter what else changes at the University in the administration and management of it the board still has that decision to make and they will continue to have it. Yeah. (00:35:54) Here we have a bubble butt. (00:35:55) Sure. How did the Region's if we're talking about limited financial information being given to them fulfill this obligation then how do they make a critical determination in any in any institution and the larger it is the more the more Focus the financial history information has to be and the important thing is not to provide massive amounts of detailed financial information from which the important things can't be called. The important thing is to provide the Board of Regents with a measurement and control system that points out the important parameters in the financial management against which they can measure financial performance and that can be done and should be done (00:36:39) a question over there. (00:36:41) Thank you kindly for an excellent presentation. But as you indicated during your presentation most citizens of the state of Minnesota consider the university to be the state's most important asset and perhaps the question does not relate to your decision to your committees discussion. But why in your opinion did the print media in particular? (00:36:57) Clear undertake such (00:36:59) a vicious unrelenting attack on this important asset. It seems that they were bent on devastating or destroying this great asset and I think it really bothered a lot of citizens. The university itself conducted a survey and found that over 85% of the citizens of Minnesota think very highly or extremely highly of the university in spite of what the price is done. You're asking me to jeopardize what I consider to be my good relationships with the members of the press. Some of them are sitting right here. No, I can't answer that. I have personal opinions like other people and I think unfortunately the thing I'm critical of the press for in the in the February March period was not highlighting the problems. The problem should have been highlighted and they they brought a lot of focus on to the kind of solutions that are now coming forth what I criticize the press for is that some of the things that they talked about in that what I alluded to a sort of a Feeding Frenzy of enthusiasm between st. Paul and Minneapolis. We're not accurate reporting of the facts and the conclusions were drawn from inaccurate reporting and that's where I think the problem came from. It wasn't the fact that the Press route they're commenting on what was be going on. We have a question here from Janet Dolan. (00:38:12) I'm always curious. You seem to hum along and then run into a disaster. Did your task force find whether these problems have been there a long time and just simmering or was there some Watershed event like the economic crisis of the 70s that somehow brought about these problems. (00:38:29) Well, you're asking me to be philosophical about institutions and particularly big ones and I've had some experience myself in one which has had a few of its problems over the years but you know and big institutions move very slowly and I think particularly big academic institutions where they're very decentralized way of managing the function of teaching really and doing research and many times when things look pretty good on the surface. The the Decay is set in underneath and suddenly as in this case triggered my East Cliff, but obviously that that was just a symptom of something that have been going on there for a long time many many years through the administration of a number of presidents and a number of chairman of the board Governor Anderson. Have to say a bunch of things by because on the surface things seem to be pretty good. You don't notice them and it's not very often that you'll find a manager or a president a Chancellor a chairman of the board who will come in and disturb something that looks pretty good on top because he thinks he finds some weakness underneath all of us have the tendency to try and fix those little weaknesses but not disturb the whole big elephant, which is moving slowly towards its longer-term objectives of feeding itself. So it I think what happened at the University maybe it was more dramatic maybe the Press made it a much more dramatic event than a really was there a number of other universities which I could cite that have had not unlike problems just this year in fact it but haven't had quite the excitement that went with our problem with University of Minnesota and I have to say this incidentally and in defense of the Board of Regents who I think anybody any board no matter how Experienced we may have been in running our boards to have been faced with the problems that generated very quickly around East Cliff and the reserves and the inadequate communication the distrust that existed between the board and the and the president the administration any board would have been hard-pressed to find a way to lead the institution out of that problem. And I think today as a result of the problems as a result of the things that we have said in our report, which the Board of Regents have seen and discussed and a number of them have come at a very favorably on as a result of a whole lot of things like that. The Board of Regents is functioning much better today than it did a year ago when all of the crisis was beginning to brew. So it's not unusual for this kind of a thing to happen in a big institution. It's unusual to have the Press make such a thing about it and then to have all the drama that was surrounding president Keller's resignation. Thank you a question from the back. It's my observation that the obsolescence that you identified in the information system is pervasive throughout the university in the Laboratories in the classrooms in the libraries. And I wondered if you if your committee thought at all about the resources that it might take to make the do to equip the university in a way that can perform the functions, which you're asking it. As I said earlier our task was not to look into the academic side of the institution at all. So what I'm saying in answer to your question is as a result of a lot of personal information, I've gathered over the last year talking to a lot of people and there is indeed a body of statistical information that's available that talks about faculty salaries relative to peer group salaries that talks about ratios of grad students to undergrads ratio grad students to faculty ratio of undergrads to faculty ratio of investment in plant and Equipment particularly in the engineering and the Sciences relative to students and so on and other universities and that body of factual data supports the conclusion that we have been under spending if we want our University to be thought of in the top class with a top 10 or 15 or even 20 universities in the country. We're going to have to spend more money in order to raise those kind of indices and in order to frankly attract and keep the quality salary faculty that we must have to be such a great institution. There's a lot of work to be done on that. The subject is well on the table. I'm sure the new president comes in knowing all of that very clearly and I'm sure in due course will have a plan to correct it but I think our problem our commission was addressing funding from the point of view of saying to the legislature the things that we've looked at are also going to require a lot of money and we'd better be prepared for it. Thank you a comment on the report from former Governor Anderson Well, I think the expenditure report is just an incredibly wonderful contribution to the University of Minnesota and the people of the state I particularly appreciated the emphasis on the autonomy, but then so carefully making the distinction between autonomy and accountability and then as we've been hearing you don't achieve Excellence without making an investment and it is true that there has been an erosion of the standard of the university in real dollars over the last 10 20 years and and I truly think also that out of this report out of the trauma of this year. It is really shown that great support the university has by the concern that people have shown and I think really we're on the verge now with the new Splendid president of Nils hasselmo of one of the greatest periods of development for the University we've ever had I just feel thrilled to be here this noon and hear the comments. I find nothing to object to even giving the Regents a little privacy in some of their deliberations, especially the latter Point Governor. We have a question in the back of the room over there (00:44:31) the nature of your report seems to indicate that maybe Problems have existed for several administrations. And I wonder if you would comment on whether the report in its detail that has not I don't believe in covered yet discusses the role of Ken Keller whether he happened to be at the wrong place at the wrong (00:44:46) time. We were not charged with and we chose consciously not to assign blame to anybody for anything. That was not our job and frankly. I don't think that would have been constructive at all what's been has been done and we've got to live with that for whatever reasons and most of the reasons we're good well-meaning reasons. Our job is to look at what problems come out of what has been done and recommend Solutions and not look back and try and see who did what when and why thank you a question from Harold Tucker. Some large University Systems have a Chancellor Works alongside the president to handle administrative matters. (00:45:28) The president has signed to (00:45:30) responsible for the academics (00:45:32) and for being a spokesman for the before the legislature. (00:45:36) Did you consider that kind of a system here? Yeah, and I think in this way that we felt that with one Flagship campus. It was our recommendation that don't change. What's there now the new president the specifications for the hiring of the new president were to fill the same job that President Keller and McGraw and all the predecessors before that filled namely acting as the chancellor of the Twin City Campus and the president of the system and we felt that the system can be made to work a lot better rather than do as you say put in somebody who handles a lot of the special functions. We think a president with a very strong financial officer with a very strong administrative officer and of course much much the most important a very strong Chief academic officer or Provost or whatever the title vice president academic Affairs maybe is the way to run it but improve the communication bring in the out Chancellor's of the other campuses. Let them be more part of Of the process the planning and budgeting and the management and the academic process than has been the case in the past and that's a better way to do it. Thank you question over there Jane. (00:46:51) Yes. Do you think the university should maintain a reserve (00:46:54) fund and if so how might that affect its ability to to obtain adequate funding from the legislature? The university has in our opinion as we debated and talked about that subject as seen through Coopers and librarian who really dug the figures in the data out for us. The university has always had reserves put away in various places and what was done under the administration of President Keller and Chief Financial Officer Lily was to pull a quite a number of those reserves out and say look, we've got to use this for the total of the university and not leave it in Pockets where it can be spent by other people there was however it was it was a new thing to be done. It was something that clearly had to be understood properly. So as to avoid the problem you cite namely having legislature and this is what happened. Unfortunately as the as the reserves were misunderstood our better by the press or better yet not properly explained by the Regents and the administration as that happened the legislature and the governor really got Furious. And I mean that in no uncertain terms and saying well the University's got all this money. Why are they asking for 20 some million more to help their commitment to focus program. And of course the request for funding was cut off to 0 the result of all of that. Now that having surface now the reserves are out there. Everybody knows they're there and the management and control of the reserves will be better handled because it is now out in the open. It is now understood by the legislature that the university does need reserves the question of not only the reserves themselves, but what are the unspent ballot fund balances which got lumped into that Reserve number? Whereas most State Department's the Departments of the state. They the end of the term you spend all your money as quickly as you can so you can get more for the next biennium and University you carry those funds over more like we do in a business through fund accounting methods and some some of those carryover funds that had not been spent got mixed up. Reserves and so on but yes, so there was a lot of misunderstanding which I think is now been out in the open and is understood and I think the legislature I hope the legislature understands that in order to tied itself through difficult times to have money available for changes and shifts and additional things that it needs to do to avoid the cycling of budgets that can absolutely paralyzed an educational institution a university must have reserves and the interesting thing was this we asked our Consultants from Michigan and Stanford what they thought about the reserve level, which is now been set at I think it's 40 million or 45 Something. The number of that the Board of Regents have accepted as the level of reserves they like to maintain the answer from our experts at other great universities is that isn't enough for University with the size of this one where the assets at this university has with a with a billion and a half dollar spending per year 40 million. Is not enough money to have in reserves and I think this concept is is now understood. Unfortunately, I got all mixed up in president Keller's resignation and other things that confuse the issue badly in March and unfortunately, the Regents didn't step forward and say we know about it and we support it. They couldn't they didn't know about it as much as they should have and so on thank you again for our radio audience is a Minnesota meeting with Ed's and Spencer chairman of Honeywell discussing governance of the University of Minnesota. Now question for Malcolm McLean formerly a president of a private liberal arts college. In your in your presentation, you mentioned the the vision and goal of being one of the top 15 universities of the country. Can you be a little more explicit about what goes into getting that high Prestige? What are the elements of that? How will we know when were there and what will that mean to the people of Minnesota? Well, I'll try and answer this is beyond the scope of the commission and you're asking for my personal opinion now and I'll want to preface my answer by clearly saying that because it wasn't in our charge to do that. Obviously, you've got the financial numbers that I mentioned ratios and things that are compared between Minnesota and Michigan and Purdue and Iowa and so on I guess I'd say it's it's an awful lot of it depends upon how the institution is viewed by other institutions, you know, what other presidents think about what the heads of other departments and other universities think about it and that gets back to the quality of the faculty. The research papers that are presented the patents that come out of it the the law. Cavity of good faculty member staying on the campus and all of those things and those are the the measure those are the real indication and a lot of it is I think in some ways subjective. It's very hard to measure clearly Thank you question from over there. Mr. Spencer, what role do you see for yourselves? And the other commission members As you move forward in the 1989 and kind of if you will selling your recommendations to the legislature. Well, we have self-destructed as of December 1st today. We're finished. And that was the plan of having said that one of the first things were going to do. We had a lot of meetings and we and every meeting we had was an open meeting and we all worked very hard and we never really got to know each other very well and we're going to have a social event sometime early in 1989. We can bring our wives and because we are no longer commission. We don't have to invite the Press. (00:52:39) A question (00:52:40) here from Mary and the other thing I let me give him more. So a little more serious and I suspect that people like us down how who obviously isn't it was a vice chair of the commission and a very experienced person in this Arena and I and perhaps other members will be asked to testify by the legislature of want to hear more detail what we did and what we learned and I suspect that sometime in the course of the next year a follow-up might be appropriate just to kind of put our nose back into what the university has done about it to see if there's more help needed. Thank you a question from marionettes wider. (00:53:17) You've indicated the need for eliminating the adversarial relationship between the president and the regions and also for the Region's to represent the state as a whole are there some plans in which the legislators can be educated about the report the implications of it and their own role to eliminate what seems to be an adversarial (00:53:39) relationship. I think they to the extent that there appears to be an adversarial relationship with the legislature. I suspect its individual legislators who feel in some way that the university isn't meeting the needs of their constituents rather than a an opinion of the legislature. There are certainly a lot of people had legislature who are graduates of the university and who endorse the concept we've been talking about of pushing the university into into the level of greatness that it should have to properly stand at the head of our system educational system here in the state. We had a meeting with legislators. Some of the very thoughtful leadership and both sides of the aisle and in both houses and there is a I think they are they welcome this report. They endorse a lot of what's said and they're looking forward to working with the university in the budget process to see that some of the things that we recommend are indeed going to be done. So I think the I think the legislature also has its share of responsibility in this this era that we want to create a man in a climate of support and Improvement for the University, but the university has to have its own accountability. It has to be it has to do its thing well, and if it does that I think it'll get the support of needs from the legislature. Thank you a question over there Jane. (00:55:01) Mr. Spencer. There's another element of autonomy. I might wonder if you might comment on namely that role the Deans and the faculty in the last four or five legislative sessions have seen I think a presence independent of the University many respects by various departments and Dean's was true particularly some of the private Efforts and last several years and I wonder if the report speaks to that (00:55:19) issue don't know that again gets into how the academic side of the institution functions and I wouldn't want to venture into that except to say that a university is a much more democratic institution than a corporation and people are therefore feel free and should speak out vigorously. Whereas it honey. Well, it might be a little harder sometimes no open meeting law and Honeywell open meeting lot on anyway, a question from Kurt Johnson of the Citizens League Sitting here wondering (00:55:53) if we shouldn't always expect the road to better governance to be pretty tricky if those in (00:55:59) charge always have the opportunity to be autonomous (00:56:04) and the obligation to be accountable. In that context of those mixed feelings. Did you report (00:56:12) set out anything by way of strategies to get (00:56:16) different regions Behavior. (00:56:19) I hear you talk about the standards better information (00:56:24) for concise greater (00:56:25) concentration on policy speaking with one voice after (00:56:29) votes, but do you get specific (00:56:32) enough to say how you'd get the Region's to behave differently in other words? How is this different from the dysfunctional family leaving the counselor's office being told to go home and behave by better standards. I think like members of The Faculty probably Kurt if you're elected to political office as a reagent is you feel the obligation to speak out and what you think is right and I don't think that's a controllable function. What we address is the cohesiveness of the board of a hole and make some specific suggestions as to how once the speaking out is done. And the opinions are weighed the board decides and then moves to head together with the president in the university in the same direction. (00:57:16) Mr. Spencer if I could follow up in a way, is it fair to say that your academic Consultants were being perhaps to diplomatic and that in their recommendations is a thought that the state legislature itself in recent years has not set high enough standards for the Regents and for the University. (00:57:34) No, we didn't address that but I suggest you read appendix a and you'll find that the Consultants are probably much more direct and less diplomatic than the commission was in some of their comments. (00:57:47) I was moved earlier to remember that the 1988 is the year of the dragon and great awesome things that take place. Sometimes very difficult things in the year of the dragon. But the Chinese belief the dragon also soars (00:57:59) up on high into the clouds. And so maybe we could all join Governor Anderson and his hope that this is the beginning of a very good ERA for the University of Minnesota. Thank you. Mr. (00:58:09) Spencer. Edson Spencer speaking at Minnesota meeting. He was chairman of the governor's Commission on financial management of the University Library outcasts of Minnesota meeting are made possible by the Twin Cities based law firm of Oppenheimer wolf and Donnelly like to remind you as well that Minnesota public radio's coverage of issues related to health care is made possible in part through a grant from 3M makers of posted brand notes clear to partly cloudy skies with highs from 20 in the Northeast to 39 in the southwest today in the Twin Cities area. The high should be around 32 day and then up to 43 perhaps even as high as 47 degrees tomorrow. That's midday for today. This is Bob Hunter. Today's programming is sponsored in part by Linda heart and Scott Spencer in celebration of the 10th anniversary of their first date. This is ksjn 1330 Minneapolis-Saint Paul, K ns are 88.9 FM Collegeville. St. Cloud and W NS D 100 Point 9 FM Cloquet to the superior take off follows this news from the Associated Press at one o'clock.