Minutes*
Faculty Consultative Committee
Thursday, May 23, 1996 (Part I)
12:00 - 3:00
Dale Shephard Room, Campus Club
Present:
Carl Adams (chair), John Adams, Carole Bland, Victor Bloomfield, Virginia Gray, James
Gremmels, Roberta Humphreys, Laura Coffin Koch, Fred Morrison, Harvey Peterson
Regrets:
Lester Drewes, Dan Feeney, Russell Hobbie, Michael Steffes
Guests:
Provost Frank Cerra
Others:
Martha Kvanbeck (University Senate); Maureen Smith (University Relations); Bruce
Bromberek (SSCC); a few other faculty
[In these minutes: Discussion with Provost Cerra]
1.
Discussion with Provost Cerra
Professor Adams convened the meeting at 12:00 and welcomed Provost Cerra to the meeting; he
pointed out that this was a regularly-scheduled meeting with the provost, so there was no set agenda.
Professor Adams said that one item he has been interested in is the analysis of "faculty flow" or
kind of personnel changes and how he is thinking about it. One reason for being interested in this is
because it is something the Regents have been pushing for the larger University. The faculty has not yet
responded to these questions, so it might be helpful to take advantage of what Provost Cerra has learned.
That question leads to a group of areas, Provost Cerra said, as one tried to understand the forces
acting on the University and what changes are needed in how it is operated. One tries to figure out what
makes sense to do, and what are the implications.
The Academic Health Center (AHC) was forced into this on a different timeline because of the
Fairview relationship; they had to figure out what would happen if the transaction did or did not occur,
and what the implications would be for the 450 clinical faculty and support systems they have. The
business systems available through the University did not support the analysis needed to determine the
present situation or to do financial planning. Provost Cerra said he and the CFO of the Medical School
worked out what it is they wanted to do, with help from the consultants, and approached the issues from
the point of view of modeling and financial planning for a rolling three-year period. He explained to the
Committee the nature of the plan they developed and the numerous factors they built into it.
*
These minutes reflect discussion and debate at a meeting of a committee of the University of Minnesota
Senate or Twin Cities Campus Assembly; none of the comments, conclusions, or actions reported in these minutes
represent the views of, nor are they binding on, the Senate or Assembly, the Administration, or the Board of Regents.
Faculty Consultative Committee
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2
It was with this model that he first began to fully understand the human resource base of the AHC.
It is a funny shape, with a small tip comprising faculty and a much larger base, with 60-70% of the
compensation budget not for faculty.
The plan is operational, and can be used with colleges, departments, the whole AHC, or any
combination of units. Provost Cerra said he would be glad to share it with the Committee once the
information was verified.
The model can also be used for other things, such as re-balancing the workforce. They are starting
a new initiative to improve access and user friendliness with the research community in pharmaceuticals;
the model can be used to evaluate the investment needed and payoff expected down the road. It can be
applied to the Fairview transaction.
He described the variables, Professor Adams said; do they include something like an early
retirement program? It does, Dr. Cerra said, although he has not yet done anything with it. One has to
start to think about the workforce, and make certain assumptions. One might stop hiring in some
category, then consider the attrition rates, and so on, and learn what will happen to compensation. They
can focus on early retirements, and consider the "tails"; the model will project costs, although any of the
projections are only as good as the data entered.
To make any model like this work, Professor Adams observed, one has to make heroic
assumptions and projections, and assess how good they are, but it does provide the framework for a
discussion. His perception is that at least some of the Regents have been asking for this kind of thing.
As have the faculty, Professor Bloomfield observed. Professor Gray suggested the model could be sold
to the rest of the University to replace CUFS.
Professor Bloomfield said that these kinds of forecasts are valuable. The faculty are being told
many things by the administration, but one has very little confidence in the numbers or projections that
back them up. This kind of modeling would be helpful. And once it is created, people can ask different
kinds of questions, Professor Adams added, and get engaged in the process. He related that he and
Provost Cerra had talked about this in the past, and the need for it; his concern, he said, is that while
Provost Cerra is making progress, the rest of the University should be thinking along a similar line.
Professor Humphreys said she had several questions, the first of which concerned CSC Index,
which has been a source of irritation for some time. At his last appearance before the Committee, he said
CSC Index would be leaving and the AHC would take over the restructuring process. When are they
leaving? What is the timetable for phasing them out?
Provost Cerra said it was a fair question, and one to which he had an answer. Since he had spoken
with the Committee before, he has been doing a number of things with the advice of a number of
thoughtful people in the AHC who he had not known before (e.g., in the School of Public Health). One
effort has been reorganizing the case for change in the AHC; he is almost done with this. What are the
implications of this for organizational redesign? That leads to the question of how much help is really
needed. He had considered at length where the AHC is in the process, the committees that are working,
what the needed deliverables are for a redesign, and what kind of help would he need? What is left that
he needed help from CSC Index on? He said he has a clear idea of what kind of support systems the
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3
AHC needs, and began to look around inside the University (which is his preference) for consultants.
Those contacts have been started; the process will be fully completed and operational by the end of June.
So they will be leaving by the end of June, Professor Humphreys asked? Provost Cerra said they
would, but he noted that the biggest piece that needed to be built is an operational infrastructure-information systems, financial planning systems, human resource systems that work, public relations
systems. They need to be built across the AHC so they can make things work and can put resources
where they are needed and can help people out and get answers to questions.
There are certain elements of that where CSC Index has an operational expertise, and he may wish
to use them for those pieces. What he is doing is separating those pieces needed to help make the place
run from two other items, research and education. In the case of the latter, he is redesigning the effort so
that faculty figure out, in true partnership with the administration, what the best way to do things is.
In most people's minds, he said, it is becoming clear that the clinical enterprise must be separated;
it must be run in an efficient, controlled type of management system. That is well on the way to
happening; there is agreement with all the faculty on the basics of the group practice that the faculty will
soon vote on, and implementation will begin within a month.
From what she has heard, Professor Humphreys commented, the practice plan was not the point of
contention; it was the restructuring of research.
Provost Cerra agreed, and said there were two other issues. One is how much education and
research can be separated into two distinct structures. There is a lot of co-dependency and cross-over,
that as much as one would like to know the precise revenue and expense streams in order to make better
decisions, how much can they be separated? The second question is the extent to which they should let
corporate management practices penetrate the management of education and research? That is why he
has separated what is needed to make the car run; those are different from issues of governance, decisionmaking, curriculum control, research environment that are the soul of what is done at the University.
Even though there is no question in his mind that there is a need for cross-AHC coordination, and
people to do it, where he came down is that there has been too much time spent building good things that
should not be destroyed. Schools are good, departments are good, programs are good. There are
fantastic groups that work together; there are also great individuals who work better as individuals.
If one tries to put that matrix together, one begins to ask how to ask the questions and try to get the
partnership together to solve the core questions? Out of that will come the organizational design. He
said is about two-thirds done writing a document that will identify general operating principles and
identifying the crises they are trying to fix. The latter he split into several categories. First is the
Hospital patient care business. The second is the professional workforce issues that are being imposed
on the AHC from the outside, the mix of physicians, nurses, pharmacists, how many, cost of training,
etc., in a market that is telling the University that if it does not fix things, the market will do things itself,
including creating its own medical or nursing school if necessary.
Another element is the competition facing the AHC for its education and research products (e.g.,
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the demand for physicians trained in management, a program the University does not have but which
local private universities do, and outcomes research). The market is tired of waiting for the University to
get its act together to provide the products or services that have been traditionally University-based; there
is something fundamentally wrong with the system and the market is going to vote with its feet: it is
going to walk away.
The last parts of the document address the implications of these problems and crises and some
organizational redesign. The last part will be a specific work plan for the next year. The paper will be
available to anyone after the middle of June.
One of the things that has been grating on the people in the AHC, Professor Humphreys said, has
been the atmosphere that has been created. She recently received something call "Academic Health
Center Values." Provost Cerra said he was familiar with it. Professor Humphreys said she was disturbed
when she read it. While there is nothing wrong with stating one's values--the Senate passed a code of
conduct the previous week--most people will not see the code of conduct displayed on every bulletin
board. There is a plan to make posters of these "Values" and have them posted all over the AHC?
She distributed copies of the "Values" to the Committee and commented that she objected to a
couple of the items on the list, mostly to the tone. One of the provisions is "collective good": "the good
of the Academic Health Center must supersede the interests of the individual." Or one can object to
statements such as "We must be accepting of the need for continual and meaningful change" and "We
must recognize academic and managerial leadership." Some would say these are fine, but she said it had
to her the ring of 1984. This will grate on people, Professor Humphreys concluded, and has a very
corporate ring, inappropriate to an academic environment.
Provost Cerra asked who Professor Humphreys thought developed the values. The statement came
from the Phase I QRTC Committee in the AHC, not CSC Index. That was one committee; the process is
now in Phase II, which consists of about 100 faculty. The "Values" were put on a shelf.
He said he comes from a school of thought that one of the things that guides people is a compass
or set of core values; unless one has those core values, one tends to stray. The development of a missionvision-value is critical, especially if one is going to enter a change process. But there has to be a
collective, community process to come to consensus that those are indeed the vision and values.
Provost Cerra said he was unaware anyone had any plans to put the "Values" up on posters or
anything else; if so, it will be stopped. Reports that they would be probably came from minutes and are
not a plan. The "Values" are not ready for that; there is not enough consensus that those are the values
the AHC wants to espouse.
Sooner or later they will have to come to grips, as a partnership between faculty and
administrators, with the balance between individual development and the development of the community.
Given what he understands what is going on in the internal and external world of the AHC, he said he
would submit that unless the AHC learns to work as a unit, it would not be here in five years. Or, what is
here will be one-third the size it is now, and won't be on the rating scales of the country. There must be
some decision about the compromises to be made or they won't be anywhere. What that means, in a time
of flat or falling revenues, is that unless there is some agreement on how programs will interface with
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departments and schools, and how resource allocation decisions are going to be made, the AHC does not
stand a chance.
There is something missing on the list, Professor Humphreys said; there is nothing about freedom
of inquiry. Provost Cerra said he was sure there were things missing, although freedom of inquiry was in
the vision statement. He explained that he is trying to put this all into one document, and said the values
list is nowhere near completion, either in content or the process by which it would be said to be ready.
There are parts of it that are acceptable, and he agreed completely that there are other parts of it that
sound very corporate in syntax and terminology.
It is easy to see why something like this distributed to the faculty would cause them to complain,
Professor Humphreys concluded; Provost Cerra agreed that it was a mistake.
Professor Bloomfield asked to turn the topic to tenure, and asked Provost Cerra how he believed
the Senate deliberations about the tenure code--apparently at least reaching a partial conclusion--would
affect the AHC, and if he would have to do things to satisfy the legislature in order to have the money
released.
Dr. Cerra said he has only read the first proposal for tenure code amendments, which did not
include the provisions for re-training, reassignment, and post-tenure review. He said he has had some
thoughts on the subject. He does not view changes in the tenure code as a magic bullet, the answer to the
human resources problems, or any such thing. The code can be cleaned up, but that is only one piece.
He said he DOES think that some of the key concepts that need to be built in are related to
flexibility. There are certain situations where contracts for term appointments are essential, such as for
people who are predominantly in clinical practices.
His other concern, at the other end, is where one is trying to deal with a situation where a
significant number of faculty are 100% research-based--perhaps an entire school. If it has $20 million in
research grants, of which $10 million is used for salary, and 10% of the money is lost the next year, the
AHC has a $1 million "structural instability." Where does that money come from when all of the schools
are spending their reserves down? This is a real problem.
Another piece is that as the AHC goes forward, and new opportunities come up for both research
and education funding, there has to be the capacity to share risk and to share rewards. When he talks
about this, Dr. Cerra said, it is always in the context of the larger human resources, which includes
administrators and managers. They have to share risk and, if they do well, they have to share rewards.
There has to be a system where, at least at some level, parts of compensation are at risk. NOT ALL, he
emphasized; he said if one is funding a research program, there has to be a reasonable base salary
guaranteed. That is part of HIS risk, as the administration. But to share the risk, there has to be another
portion of the salary that is PUT at risk, in order to move forward. Otherwise he takes ALL the risk, and
that does not seem fair. Especially when one is trying to not only be responsive to the market, but to lead
it.
He said he would be willing to put a portion of his salary at risk, based not only on that system, but
also on one that evaluates how well people did. He said he needs to be evaluated by the faculty; did he
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meet their needs in his ability to manage? In setting policy? In working together as a team with faculty
to decide how to make the tough decisions and what criteria are? If he cannot accomplish that, he should
not be provost and should go back to being a professor.
The implication of this is that there has to be the ability to move forward on a system that relies on
productivity.
Another example is public relations; what is the University doing with it? They have done a
tremendous amount of market surveys and analysis; the idea is to have a program that begins to focus on
education and students, in an environment where the rewards are dominated by research productivity. It
will not work; one cannot say the University has the best access system, it is responsive students, it is a
Big Ten school. There was a piece on public radio recently reporting that it is open warfare among
undergraduate schools, with some coming right out and saying they are cheaper, have easier access and
easier registration, and have higher quality courses. It is open warfare, he repeated; that is what he was
referring to when he talked about competition for students. There is no way the University will move
forward unless it has the ability to reward education the same way it rewards research. That means
recognition, tenure, and everything else--and must be on the basis of the faculty deciding on what
education and performance are and how they should be evaluated. The process should be faculty-driven
and should pay a decent amount of money. To compete, ultimately, the AHC will have to get into the
"master teacher" concept.
Provost Cerra said he had a few concerns about the current proposals for revising the tenure code,
and will meet with Professor Morrison to discuss them. He has no problem in defining base salary as
current salary. He has said previously that he would like special arrangements for the AHC, but if that is
not in the cards, it will not limit his ability to move forward. If it is too much trouble, causes too much
pain, or creates too many diversions from the real problem, then get rid of it, he said; he could work with
it.
His concern about base salaries is the spread, Provost Cerra said; they are all over the place. They
range in the AHC from $20,000 per year to $180,000 per year. On what basis? This does not include
department heads. How are those decisions made? There are people of equal rank with 95% confidence
limits that are enormous--and they are supposed to be doing the same work. He can work with defining
1995-96 salaries as base salaries, he said, but somehow the issue has to be approached.
If one want to live in an environment where there is no risk, for a faculty member, and the
institution will take on the entire risk, then one can make a case for salaries for faculty that are roughly
what is paid at Minnesota now. Even that case is weak; the average base salary in the AHC is less than
the 30th percentile of any standard anyone wants to put on the table. That is leading the AHC into bad
problems. But given where it is, with its financial structure, if the goal is to get better faculty
compensation, that cannot be achieved without both the faculty and administration agreeing that some
things must be put at risk, with the risk shared. Then the AHC can get about the business of moving
ahead, and make the tough decisions. Very few of the decisions, he added, are not tough.
There is still need for flexibility for term contracts, which will have to involve research or
education. In terms of education, he has a request from one of the health systems. They know the AHC
is putting together a faculty-based course on basic science and principles of managed care in today's
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7
health care environment. The system knows that their physician group is less knowledgeable than the
faculty working at the University--which is a surprise--and are willing to buy the instruction from the
AHC. There is a whole new avenue for course development that will generate revenue--that requires
people to teach. It is a problem, because it will have an end; it may go on for five or ten or fifteen years,
depending on how fast the environment changes. If he is supposed to be hiring people to do the teaching,
and is going to reward education and grant tenure, should he take the total risk for a produce that may not
have more than a five- or eight-year life? What happens at the end? Does he have the capacity to retrain
or reassign? All of these things have to be done in a reasonable way, and not in a one-way fashion.
Unless that kind of flexibility is built in, Dr. Cerra asked, what tools does he have to deal with the
structural instability in the budgets? Not many. He can say there will be no hiring, because there is no
money. Or there will be no P&A hires, or new programs. There will be no money to pay for faculty
members whose grant funding has lapsed for a year or two. Once that investment potential is lost, the
place will go downhill. People will leave, creativity will be stifled; what will there be to help develop a
creative new faculty member? That is what he worries about, Dr. Cerra; somewhere there is an answer
about what reasonable things to do are.
Professor Humphreys then commented that a major source of concern has been the information
and documents that CSC Index has been using, the so-called operating documents. Provost Cerra said
she was absolutely correct. Those documents, she said, have been cloaked in secrecy, and people would
like to know when the information they have been collecting will be made public. Particularly of interest
is what, from those operating documents, he intends to adopt and what he intends to discard.
Dr. Cerra said that within the next three to four weeks there will be made available the beginning
of more information than most people probably want. He said he believes in an open, free exchange of
information and questions; out of that somehow comes the answers that are needed. That takes a little
longer, but that is fine; he does not mind.
That is good; apparently Index did, Professor Humphreys commented. There is a plan in place to
fix that problem, Dr. Cerra said. Operating in secrecy causes people more apprehension than they would
feel if things were in the open. Dr. Cerra agreed, and said he has no plans to withhold any information.
He only has to get it together in a way that makes sense to him, so when he makes it public and people
have questions, he can have intelligent answers.
The President will be at the meeting later, Professor Adams noted, and Professor Morrison intends
to ask him about compensation; where is the AHC in terms of compensation? Overall, there was about a
2.8% raise; about 1-1.5% non-recurring and 1-1.5% recurring (merit) raises. For one school to do so, it
had to cut courses and not hire some P&A and civil service people they need.
The big exception is the Medical School; when he figured out what would be needed, it totalled
$8.6 million. This would come at a time when the current budget is drawing down reserves by $8
million, and when the planned budget for next year includes another $7 million in draw-down on
reserves. He presented the data to the chairs of the Medical School departments and said a decision had
to be made--it could be 1-2-3%, and could be recurring or non-recurring. There are $16 million in cash
reserves that have to get the Medical School through the transition; the head concluded they could only
give raises by pulling money out of departmental reserves or retrenching. They decided to do neither,
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8
and asked him to request an exemption (for the fourth year in a row) and to make a clear statement that if
raises are to be given in the future, there should be resources available to make them.
Professor Adams reported that he has heard from the students that they would also like to be
involved in the process. Provost Cerra said he has been trying to arrange for meetings with the students;
he has promised them they would be involved, they have good ideas, they are primary customers, and
need to be effectively involved. He promised to work with them. He also said he would like to activate
the AHC provostal faculty consultative committee as soon as possible; Professor Bland said the elections
have been held and the PFCC has been elected. The graduate/professional students have also been
elected, Mr. Bromberek informed the Committee, so could begin to work immediately; the
undergraduates may not be elected until the fall.
Professor Adams thanked Provost Cerra for joining the meeting.
End of Part I.
-- Gary Engstrand
University of Minnesota