1. Office of the Legislative Auditor State of Minnesota MnSCU System Office February 10, 2010 Presentation to the MnSCU Board of Trustees Audit Committee MnSCU System Office February 10, 2010 Presentation to the MnSCU Board of Trustees Audit Committee

2. Overall Conclusions MnSCU needs a system office to help ensure system-wide direction, accountability, and support MnSCU leaders should take additional steps to improve the efficiency and effectiveness of system office services

3. OLA’s Evaluation Responded to legislative concerns and MnSCU’s request Methods: Analysis of data and documents; interviews; surveys Key issues: What roles and activities are essential for the system office? Are services provided effectively and efficiently? Do system office services “add value” to what the campuses do?

4. MnSCU Revenues, Fiscal Year 2009 Total MnSCU Revenues ($1.8 billion) MnSCU System Office Revenues ($89 million) Other State funds Tuition/fees Grants

5. MnSCU System Office Organization

6. System Leaders Took Steps to Address Several Key Governance Issues Over the Past Decade Clearer goals for the system Monitoring progress toward goals Stronger board-chancellor relationship Forums for presidents to provide input into system decisions

7. But Campuses Have Concerns About Some System Office Priorities and Services Most presidents give the board and chancellor only “fair” or “poor” ratings for: –Considering the needs and priorities of individual institutions –Allowing institutions to decide issues best addressed at the local level Opportunities in some areas for system office to provide better services to campuses

8. The System Office Grew In Recent Years Between fiscal years 2002 and 2009: –Expenditures grew 52 percent (or 15 percent adjusted for inflation) –Share of of total system expenditures grew (4.1 percent  4.6 percent) –Staffing increased (318  385 FTEs), as did consultant expenditures Reasons: system initiatives, campus requests, increased appropriations

9. Judging the “Right” Size of the System Office is Challenging No accepted standards Little data for interstate comparisons Limited performance data

10. Campus Presidents’ Views on System Office Size %

11. MnSCU Needs a Sizable System Office and Some Changes in Campus Administrative Responsibilities Many system office services viewed favorably by campuses Example: Legal services Additional delegation is reasonable Example: Job classifications Potential for multi-campus delivery of some campus services Example: Payroll processing

12. The System Office Needs More Scrutiny from MnSCU Leaders Board’s oversight of system office’s size and performance has been limited Some system office divisions and activities need attention from board and chancellor Examples:Information technology (IT) Academic Affairs Division Development Division

13. IT Services Accounted for Most of the System Office’s Recent Growth

14. Progress on IT Initiatives Has Been Mixed Upgraded IT “infrastructure” Took on too many projects, and priorities not always clear Many projects to improve business functions still in progress Weak project management –Examples: Too little user input and support; limited evaluation of contractors

15. Some Academic Affairs Activities Need Oversight or Action Examples Student credit transfer “Seamless” student services College faculty credentialing Fire/EMS Center

16. System Office’s “Development” Activities Need Continued Scrutiny Small system office division Limited returns from past fundraising efforts Campuses give relatively low ratings to the division’s performance

17. MnSCU’s Board and Chancellor Should: Revise oversight, staffing, or organization of some system office functions Develop better measures of administrative performance Delegate more responsibilities to campuses that have the necessary skills and training

18. MnSCU’s Board and Chancellor Should: Foster expanded use of multi-campus or centralized services Monitor consultant expenditures and performance more carefully Improve selection and implementation of IT projects

19. MnSCU’s Board and Chancellor Should: Clarify presidents’ purchasing authority Ensure transparency for charges imposed outside the allocation process Pursue a more flexible, timely process for ensuring the quality of college faculty Consider ways to foster more efficient capital project oversight

20. Possible Improvements in Board Oversight of System Office Review multi-year trends in overall system office staffing and spending Review the use and cost-effectiveness of professional/technical contracts Periodically review the performance of selected system office functions

21. SummarySummary System office spending = $1 of every $8 MnSCU receives from state Campuses value many system office activities, but room for improvement MnSCU leaders should scrutinize (1) the campus-system office division of responsibilities; and (2) the system office’s role, size, and performance

22. MnSCU System Office is available at: www.auditor.leg.state.mn.us