Selected Auditors Evaluation of State Land Ownership

Recently the Minnesota Legislative Auditor has been asked to evaluate state ownership of land, which includes public colleges and universities. The outline of their scope is listed here. It's not clear whether the audit will include the University of Minnesota system, which is separately organized from the state. Incidentally, the U of M land holdings are about 4 times the size of the state universities and colleges, so it would seem logical that they would be swept in. That doesn't include trust lands or other lands that are for the benefit of the university, but are not titled to the U of M.

This seems to be the first state-wide audit of land ownership in Minnesota.

Nationwide, there have been several broad programmatic audits that included higher education real estate. For example, California undertook a state-wide audit in 2001, which included the University of California system and California State Universities. The report is shown here.

Oregon audited what they termed "off campus" properties, which seemed to be properties that were not located or contiguous from main campus facilities.

A recent New York audit of SUNY Upstate Medical University spent $409,000 leasing office space in downtown Syracuse that sat empty for nearly four years. The audit lays out some interesting leasing details about several SUNY campuses.

With the economic downturn, universities and colleges - like most public entities - will be the subject of intense scrutiny. Like corporate entities, the majority of their assets (and liabilities) are in personnel and land and buildings. Personnel costs have historically been easier to track and quantify or otherwise measure, and these costs are being addressed at many institutions with salary freezes, layoff and furloughs.

By contrast, very few higher education institutions have invested in measuring the performance of their real property assets, nor have they given much thought to "portfolio" management. The first rule in this area is that you need to know what you own before you can manage it, and that seems to be the fundamental question being answered in Minnesota. However, it will be interesting to watch after the results are reported. There is certainly growing political will to take more activist approaches to limiting college tuition increases at public colleges and universities, and perhaps land surplusing is a short term answer.