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How the U of M should prepare for the coming demographic changes

The University of Minnesota needs to start now reducing tuition to affordable levels, reducing expenditures to sustainable levels, and re-inventing itself as an institution that values education above all else.

U of M
Traditionally, the start of a new year, and particularly a new decade, is a time for prognostications. For the most part the future remains stubbornly murky. Occasionally, however, opportunities arise that allow us a glimpse into the future. Successful organizations recognize these opportunities and act upon them.

The current budget problems being experienced on the Duluth campus of the University of Minnesota should alert the school’s administration to a similar problem in the offing for the U of M system as a whole. Over the last 10 years the Duluth campus has experienced an 8.5% decline in enrollment, which has necessitated a $5 million budget reduction. The strategy adopted in Duluth is to minimize the impact of these changes. This is a mistake.

To understand why, it may help to look at what the future holds for the main campus of the U.

The likely 2030 cohort

In a recent book by Nathan Grawe, an economics professor at Carleton College, he analyzes demographic factors that will shape college enrollment at the end of the current decade. Relying on census data he finds that by 2030 there will be a significant decline in the number of college-age individuals. In addition, the ethnic and socioeconomic makeup of this population will be markedly different. The proportion of minority 18-year-olds will be significantly higher. Overall this cohort will be less likely to enroll in college. His specific prediction for the Twin Cities campus is for a decline in enrollment of at least 15%.

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The university could try to avoid this decline by increasing recruitment efforts and by raising the percentage of applicants who are accepted. Neither of these strategies will work.

Drastic declines in enrollment are predicted for almost every region of the country. Most colleges will also be increasing their recruitment efforts. This competition will cancel out the effects of these efforts. The Twin Cities campus currently accepts about half the students who apply. Increasing the acceptance rate by 15% will not make up for the projected decline in enrollment, since less than a third of applicants who are accepted actually decide to enroll at the university. And accepting all applicants will result in a class of freshmen containing many who are not capable of succeeding in college.

Why Duluth’s strategy is wrong, and what’s working elsewhere

The bottom line is that the U of the future is one with fewer students, less revenue, and a greater percentage of students from low-income backgrounds. But this group of students is precisely the one that is being ill-served by the U as it is currently configured. It is for this reason that Duluth’s strategy of trying to minimize the effects of declining enrollment is the wrong one.

Students at the U from lower income households graduate at a rate 14% lower than their more affluent classmates. Some drop out because even with loans they can no longer meet the cost of attendance. Some are unable to keep up academically while working an excessive number of hours. And some fail because the U is not giving them the educational support that they need.

There are well respected universities that graduate large numbers of lower income students with little or no graduation gap. The graduation rate for these students at UCLA is 17% higher and the graduation gap two-thirds lower than at Minnesota. One significant difference between the U of M and UCLA is that Minnesota devotes only 25% of its expenditures to instruction costs, while UCLA spends over 50% on instruction. Throughout the U.S. there are 85 public universities with enrollment over 30,000; only two spend a smaller percentage on instruction than our university.

Postponement is unwise

One might imagine the administration of the U accepting that changes may be necessary, but opting to postpone action until such time as events force them to it. This would be unwise. A typical organization takes time to implement significant structural reform. While the U has shown itself to be quite nimble in absorbing revenue increases, it has a demonstrated history of ineptitude when it comes to reducing costs.

In 2012 the school began a six-year program to reduce administrative costs by $90 million. This goal was anything but bold. It amounted to cuts of less than one half of one percent of its budget per year. But even with this modest goal, costs were actually higher at the end of the six-year period than when the program started. And, even worse, the administration had the temerity or obtuseness to label the program a success.

The University of Minnesota needs to start now reducing tuition to affordable levels, reducing expenditures to sustainable levels, and re-inventing itself as an institution that values education above all else.

The main product of a university is the future. It would be both ironic and tragic if our school were blinded to the realities in store by a desire to preserve the status quo.

Robert Katz works in the University of Minnesota Libraries Research and Learning Division.


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