The budget reductions are a dose of financial pain for the U of M and MnSCU. But the final numbers in the weekend agreement between legislators and Gov. Tim Pawlenty are less than half of what Pawlenty originally proposed to cut to help fix the nearly $1 billion budget hole.
Starting in July the U of M will have to work with $6 million less than the state budget mapped out last year. The Legislature allowed several options for this year's cut to help soften the blow, according to U of M Chief Financial Officer Richard Pfutzenreuter. "We'll address that budget cut by reducing one-time spending items that are available to us as well as using some of our--which is like the state, a relatively small reserve--but we'll dip into some of that to cushion that first cut," said Pfutzenreuter.
The state budget agreement deals a second $6 million reduction next year, and the university must take that money out of ongoing spending, which is harder to accommodate.
Just a little more than a week ago, university officials discussed the possibility of hiking tuition 9.5 percent this year, two percent above what they originally planned. That plan was a worst-case scenario if budget cuts approached the governor's proposal of $27 million, Pfutzenreuter said.
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"That 9.5 percent is absolutely off the table," said Pfutzenreuter. "This reduction is substantially smaller than that and we're just not contemplating that kind of an increase anymore."
As it is, U of M students this fall will pay 7.5 percent more than they did the previous year. The U offers scholarships that reduce that amount another two percent for most students.
The financial outlook has the U of M cutting costs and seeking new revenue. A U of M regents panel approved incentives for early faculty and staff retirement. If an expected six percent of employees participate, it could mean as much as $50 million in savings. The administration is also considering a new student fee to fund certain construction projects. It would start as a $25 per year cost for first year students this fall. In five years it would increase to $100 a year for all students.
Even as it deals with the budget reduction, the U of M emerges from the session with some $140 million in construction and repair money, and another $217 million to build four new high-tech science buildings.
"The biomedical sciences research facilities program was a tremendous step forward for the state of Minnesota," Pfutzenreuter said.
Like the U of M, the MnSCU system was awarded a comparatively large building budget--more than $232 million. But MnSCU also faces immediate cuts. The network of more than 30 campuses will make do with almost $8 million less over the next two years.
MnSCU should be able to absorb much of the cut without affecting individual campuses, said Associate Vice Chancellor for Public Affiars Linda Kohl.
"We also will be able to keep our tuition increases at the lowest level in a decade: two percent increase for students attending community and technical colleges and three percent for students attending state universities," said Kohl.
The MnSCU Board of Trustees is scheduled to set its tuition plan this week.
The cuts to higher education are difficult, but the current budget avoids the cuts that strike deep into college budgets, according to Sen. Sandy Pappas, DFL-St.Paul, chair of the Senate Higher Education Finance Division.
"The students have carried the brunt of the higher ed budget cuts," Pappas said. "So we're very pleased that we've held the cuts down to a reasonable level."
In addition to the money for higher education, other bills from the legislature allow colleges to notify parents if a student violates campus drinking rules or other policies. The notification applies only if the student signs a waiver allowing the notification.
Another bill allows labor organizations to recommend names to the governor for appointment to the MnSCU board of trustees.