Drop in enrollment means financial trouble for MnSCU

Decreasing enrollment is straining Minnesota's state-run colleges and universities.

The enrollment drops have been so large that MnSCU system leaders on Tuesday said 11 campuses have drafted financial recovery plans to deal with resulting funding deficits.

The system lost almost $44 million last year, or a little more than 2 percent of the MnSCU budget. Overall enrollment dropped 3.6 percent, though some campuses saw drops in the double digits. And some schools have seen decreasing enrollment over multiple years.

System officials say they are not considering closing campuses.

Trustee Duane Benson said campuses face cuts, but called the problem "manageable."

"I don't think it's bankruptcy, I don't think it's a fire sale, I don't think it's those kinds of terms," he said. "But it requires attention. We're into it early enough. I think that we can address it."

The slump follows a surge — some of it during the recession — in which enrollment throughout the system rose 18 percent to the equivalent of 158,000 full-time students between 2006 and 2011, according to a MnSCU document. Many of them were students ducking a bad economy or unemployed workers looking to retrain.

But an improving economy has prompted more students to leave campus year after year, and system officials say demographic changes mean fewer high-school graduates are entering the pipeline. Enrollment this year is expected to be about 139,000 students.

"Enrollment at regional comprehensive universities like ours is particularly sensitive to external forces," St. Cloud State President Earl Potter told trustees.

St. Cloud State is among the hardest hit. It reported a $12.3 million operating loss last year. Enrollment has deteriorated 17.3 percent since 2011 — and is projected to fall another 5 percent this year, a MnSCU report states.

Potter told trustees the university didn't see its underlying weaknesses several years ago, because it was enjoying the benefits of a surging enrollment.

Higher enrollment "was masking our lack of improvements" in managing the university's business, and "dulled the urgency" of some reforms, he said.

In 2011 the university suffered its first big drop in students.

"It's like the water going out in a harbor," Potter said. "You see all the shopping carts. And that's what happened to us. We immediately [saw] some of the practices that were damaging to the university and immediately began to correct them."

He said when the problem began, the campus didn't have the "analytical tools" to help campus officials make decisions to solve the problem.

"There clearly would have been cost-reduction strategies that we would have started to put in place sooner," he said. "We would have made different choices in the speed at which we reduced costs."

Another campus filing a recovery plan is Metropolitan State University in St. Paul, which last year posted an operating loss of $6 million. Campus officials say much of it is caused by unexpected cost overruns on the construction of its multimillion-dollar parking lot and student center.

Enrollment has been relatively stable, campus officials say — though the university is projecting a 1 percent decline this year.

Like Potter, Metro State President Devinder Malhotra said the solution won't be just cuts.

"We're also focusing on new revenues," he said. "Obviously, we are focused much more on enrollment, and we want to turn that around as soon as we possibly can."

Other universities submitting recovery plans are Southwest Minnesota State University and Minnesota State University — Mankato.

Two-year colleges that have submitted plans are Minnesota State College - Southeast Technical, Hennepin Technical College, Hibbing Community College, Century College, Minneapolis Community and Technical College, Minnesota State Community and Technical College and Mesabi Range College.

Campus officials are expected to check in regularly with system officials, possibly on a quarterly basis.