Updated 9:03 p.m. | Posted 4:14 p.m.
In-state undergraduates at the University of Minnesota's Twin Cities campus will pay another $337 in tuition and fees during the next school year, pushing the price tag to $15,027.
University regents on Wednesday approved a budget that includes a 2 percent tuition hike for the 2019-20 academic year.
Outgoing university president Eric Kaler had requested a 2.5 percent increase.
To make up the difference in the budget, the U will pull $900,000 from its reserve fund and forgo $700,000 in proposed spending.
Kaler said the lower increase is a good compromise.
"We believe we can accommodate this without doing serious damage to our academic programs, but it's as far down as we can go in the environment that we find ourselves," he said.
Regent Michael Hsu, who voted against the increase, said the U has enough money in its reserves to keep costs to students flat.
"We're using central reserves for all sorts of things. We're spending money out of it every year," he said. "Another $1.5 or $1.6 million to reduce tuition for students I think is totally appropriate."
Other regents said relying on reserves would hurt the U's financial outlook if there's an economic downturn.
In December, the regents approved a 10 percent increase for new out-of-state students. Currently enrolled students who are not from Minnesota or states with tuition reciprocity agreements will pay an additional 5.5 percent.
In a separate meeting Wednesday, the trustees of the Minnesota State Colleges and Universities system also approved budgets that include 3 percent tuition increases despite objections from several student and faculty groups.
The board pointed out tuition has remained the same since 2013 for most system schools.
Minnesota State College Student Association president Frankie Becerra said the board wasn't transparent, releasing the budget proposal just hours before a scheduled vote.
"The process is fundamentally flawed and doesn't inspire trust from those who are footing the bill, students and taxpayers," said Becerra. "At the end of the day students may, and let me emphasize that, may be willing to pay more but they deserve to know why they are going to pay more."
Trustee Roger Moe said some of the students who receive the most financial aid will not see higher bills.
"This is necessary for this system to continue its efforts on equity and diversity," Moe said.
Students at system colleges will see a $144 per year increase, and students at the Minnesota State universities will pay $231 more in the upcoming school year.