In the coming days, we will be delving deeper into the Governor’s supplemental budget proposal. Today, we are taking a closer look at higher education.
Overall, for the current biennium, the Governor’s proposal recommends $47 million in permanent cuts to higher education institutions and another $7 million in reductions to general fund spending on other higher education programs. This is in addition to the $100 million in unallotments the Governor implemented last summer.
The Governor’s proposal for higher education was strongly influenced by federal restrictions. Last year, policymakers used $138 million in federal stimulus dollars to minimize the cuts in this area of the budget. As a result, the state cannot cut spending for higher education below 2006 funding levels through the end of FY 2011.
In his supplemental budget, the Governor proposes to permanently cut funding for higher education institutions to the maximum allowable level – $36 million per year for the University of Minnesota and $10 million per year for Minnesota State Colleges and Universities (MnSCU) in FY 2011. In addition, the Governor proposes to make his unallotment cuts permanent in the next biennium, an additional reduction of $50 million per year for both the University of Minnesota and MnSCU. As a result, state funding for higher education institutions would be cut by $293 million in FY 2012-13, an 11 percent reduction from base funding.
There are also reductions to the Office of Higher Education (OHE). Like other agencies, OHE’s operating budget would be permanently reduced by three percent. In addition, most program areas within OHE would experience a six percent reduction, including library resources, the Minnesota Indian Scholarship and the Minnesota Minority Education Partnership.
A few higher education program areas will receive larger cuts. The Governor proposes to permanently reduce the State Work Study program by $2.5 million per year (a 17 percent cut), eliminating new funding that was added during the 2009 Legislative Session. Post-secondary child care grants would be permanently cut by $500,000 (an eight percent reduction), once again eliminating new funds that were added last session.
The Minnesota State Grant program, a need-based financial aid program that last year served one out of every three residents enrolled in an undergraduate program in Minnesota, is expected to fall $42 million short of what is needed to fully fund the program under existing parameters. The Governor adds to the size of this deficit by proposing to reduce base funding for the State Grant Program by $2.1 million beginning in FY 2011.
To address the $44 million deficit within the State Grant program, the Governor’s budget:
- Permanently eliminates two new benefits that were added in the 2009 Legislative Session – a Summer Transition Grant program that helps students pay for summer courses to improve academics skills before they enter college and a 9th semester of eligibility for the State Grant Program (for a total savings of $9 million in FY 2010-11).
- Temporarily increases the amount students and their families are required to pay towards the cost of college (for a savings of $35 million in FY 2011).
As a result of these changes, it is expected that the average grant award for the 2010-11 school year will decrease by $253 and 12,000 fewer students will be served by the State Grant Program.
These reductions in funding for higher education and financial aid come at a very difficult time for many Minnesotans. Enrollment increases at institutions of higher learning is exceeding expectations as the recession sends many back to school to develop new skills. For example, the University of Minnesota experienced a four percent increase in enrollment last fall, MnSCU 2-year institutions saw a 10 percent increase and private for-profit colleges saw a 17 percent increase. At the same time, there has also been a substantial increase in the number of low-income students enrolling in college who qualify for Pell Grants. Last fall, the number of Pell Grant eligible students at the University of Minnesota increased by 11 percent from 2008. The growth was even more dramatic at MnSCU institutions, where the number of Pell Grant eligible students increased by 23 percent at 4-year institutions and by 35 percent at 2-year institutions.
This is our first look at higher education, so we invite your feedback to help us refine our analysis of this issue.