Higher education funding cut below FY 2000-01 levels in compromise agreement

July 19, 2011

Higher education is cut by $351 million in the agreement reached between Governor Dayton and the Legislature, a 12 percent cut in general fund support in FY 2012-13 and slightly less than in the legislative budget. As a result, the state’s investment in higher education will fall below FY 2000-01 levels (and that’s in actual dollars, not inflation-adjusted). These cuts will jeopardize Minnesota’s future economic success, creating challenges for students seeking to improve their skills and for employers counting on hiring an educated workforce.

The working agreement cuts funding for the University of Minnesota by $194 million in FY 2012-13, or 15 percent. The Legislature originally approved a 19 percent reduction and the Governor a six percent cut. The agreement also includes language proposed by the Legislature that holds back about $5 million, making the funds contingent on whether the University of Minnesota meets three of five goals: increasing institutional financial aid, producing at least 13,500 degrees, increasing graduation rates on the Twin Cities campus, maintaining spending on research and development, and maintaining sponsored research. The agreement does not include language encouraging caps on tuition increases that was in the Legislature’s bill.

The Minnesota State Colleges and Universities (MnSCU) system is cut by $170 million in FY 2012-13, a 13 percent reduction, which is close to the 14 percent reduction approved by the Legislature in May. The Governor had recommended a six percent reduction. The agreement also adopts language proposed by the Legislature that holds back about $5 million and makes the money contingent on whether MnSCU meets three of five goals: increasing the enrollment of students of color, increasing the number of students taking online courses, increasing the number of credentials earned, increasing completion rates and decreasing energy consumption. The agreement also caps tuition increases at state colleges at four percent in FY 2012. There are no caps on tuition increases at state universities or on fee increases, as there were in the Legislature’s bill.

There is some limited good news for students as far as financial aid. The working agreement adopts the Legislative proposal to increase funding for the State Grant program by $21 million in the FY 2012-13, or seven percent. While this was the higher of the two proposals on the table, the amount still falls short of the $35 million needed to fund financial aid for all qualifying students, so the Office of Higher Education will have to ration the existing funds by issuing smaller and/or fewer grants. The State Grant program provides financial aid for approximately 85,000 low- and moderate-income Minnesota students every year.

Other programs that help students afford higher education will see cutbacks as well.

  • The Achieve Scholarship, which helps approximately 130 high achieving, high-need students access higher education, is eliminated.
  • The American Indian Scholarship program is cut by eight percent. At least 32 fewer students will be able to access this financial assistance.
  • General fund support for the Minnesota College Savings Program, which provides approximately 2,500 low-income families with a state match when they save for college, is phased out.
  • State funding for work study, which pays 75 percent of wages for qualifying campus and community jobs, will be cut by three percent in FY 2012-13.

The Office of Higher Education, which provides administrative support for the state’s college and university system and manages the state’s financial aid programs, is cut by five percent in FY 2012-13.

We know the state will need to produce more workers with degrees and credentials over the next decade to keep Minnesota’s economy competitive. However, the compromise agreement means Minnesota will fail to maintain the investments we need to create the workforce of the future.

-Christina Wessel


Legislature makes a budget offer

June 16, 2011

On Thursday, the legislature presented an offer to Governor Dayton that withdraws $203 million in tax cuts and slightly backs off of spending cuts in some areas. The major elements of the offer include:

  • Withdrawing the $203 million in tax cuts contained in their tax bill, including gradually eliminating the state property tax paid by businesses and cabins, a corporate tax cut and conforming to a number of federal tax changes.
  • Increasing funding for K-12 education by $80 million above the conference committee target, including $10 million for early education scholarships. This would match the Governor’s spending target in his March budget proposal. However, the additional funding appears to be contingent on the Governor accepting a number of controversial provisions, including shifting integration aid away from core cities, limiting collective bargaining rights, and instituting a new teacher and principal evaluation system.
  • Reducing proposed cuts to higher education by $50 million. The legislature still leaves $361 million in cuts to higher education in FY 2012-13, $190 million more than the Governor.
  • Reducing proposed cuts to the environment and energy by $13 million. The budget proposals from the legislature and Governor would still differ by a significant margin.
  • Reducing proposed cuts to public safety and the judiciary by $30 million, bringing the legislature closer to the Governor’s proposed increase in base funding for this area.
  • Providing $9 million for flood and disaster relief.
  • Reducing proposed cuts to tax aids and credits by $20 million, which would not make much of a dent in the $925 million in proposed cuts in aids to cities and counties and property tax refunds for low- and moderate-income renters, which are expected to result in increased property taxes.

The legislature’s offer doesn’t include any changes in the funding targets for health and human services, transit, jobs and economic development, or state government. The offer “expires” at 5:00 p.m. on Monday, June 20.

Governor Dayton expressed disappointment with the offer, suggesting that it didn’t show real movement on the part of the legislature.

-Christina Wessel


A tale of two visions: Higher education

June 8, 2011

Over the next decade, the state will need to produce more workers with degrees and credentials to keep Minnesota’s economy competitive. Unfortunately, the higher education budget proposals that have emerged from the Capitol will make it more challenging for individuals to improve their knowledge and skills. Governor Dayton’s budget will create obstacles for students, but the legislature’s budget will set up road blocks.

The legislature proposes deep cuts to higher education, reducing funding by $411 million in FY 2012-13, or 14 percent. As a result, the state’s investments in higher education would fall to FY 2000-01 levels (in actual dollars, not inflation-adjusted), even though our higher education institutions are serving tens of thousands of additional students. Cuts this deep would mean fewer Minnesotans will be able to access higher education as tuition increases, class offerings are reduced and student support services are slimmed down. Governor Dayton’s budget also reduces funding for higher education, cutting spending by $171 million in FY 2012-13, or six percent. This would reduce state funding for higher education to FY 2002-03 levels.

The two largest elements of the higher education budget are funding for the University of Minnesota and Minnesota State Colleges and Universities. Although both Governor Dayton and the legislature reduce funding for these institutions, the legislature’s cuts are far deeper.

  • The Governor reduces funding for the University of Minnesota by $77 million in FY 2012-13, a six percent cut. The legislature’s funding cut to the University of Minnesota is three times larger: $244 million in FY 2012-13, or 19 percent. The legislature also holds back about $5 million, making the funds contingent on whether the University of Minnesota meets three of five goals: increasing institutional financial aid, producing at least 13,500 degrees, increasing graduation rates on the Twin Cities campus, maintaining spending on research and development, and maintaining sponsored research. The legislature “sets the expectation” that tuition increases will be limited to five percent in the first year and four percent in the second year, and that mandatory fees will not be increased by more than four percent, unless approved by student associations.
  • The Governor’s proposal cuts Minnesota State Colleges and Universities (MnSCU) by $76 million in FY 2012-13, or six percent. The legislature cuts MnSCU funding by over twice as much: $180 million in FY 2012-13, or 14 percent. The legislature also holds back about $5 million and makes the money contingent on whether MnSCU meets three of five goals: increasing the enrollment of students of color, increasing the number of students taking online courses, increasing the number of credentials earned, increasing completion rates and decreasing energy consumption. The legislature also caps tuition increases at three percent each year for colleges and five percent in the first year and four percent in the second year for universities. Mandatory fees cannot be increased by more than four percent, unless approved by student associations.

Areas of similarity or agreement between Governor Dayton and the legislature include:

  • Eliminating the Achieve Scholarship, which was designed to help high achieving, high-need students access higher education. Approximately 130 students will be impacted.
  • Phasing out all general fund support for the Minnesota College Savings Program, which provides approximately 2,500 low-income families with a state match when they save for college.
  • Reducing funding for the American Indian Scholarship program. The Governor proposes a five percent cut and the legislature proposes an eight percent cut. At least 32 fewer students would be able to access this financial assistance each year under these proposals.
  • Reducing funding for the Office of Higher Education, which provides administrative support for the state’s college and university system and manages the state’s financial aid programs. The Governor cuts funding by five percent in FY 2012-13, the legislature by 10 percent.
  • Reducing state-funded work study, which pays 75 percent of wages for qualifying campus and community jobs. This is one area where the Governor proposes the deeper cuts, reducing funding by 33 percent in FY 2012-13.  This would mean 2,600 fewer students would have a work study opportunity in FY 2012. The legislature’s budget cuts work study by three percent.

A proposal unique to Governor Dayton’s budget is to reduce child care assistance grants for low-income students by five percent in FY 2012-13, resulting in 150 fewer students a year receiving help.

A proposal unique to the legislature is to increase funding for the State Grant program by $21 million in the FY 2012-13, or seven percent. The State Grant program provides financial aid for approximately 85,000 low- and moderate-income Minnesota students every year. The legislative proposal falls short of the $35 million needed to fund financial aid for all qualifying students. The Governor’s budget does not include any additional funding for the State Grant program. Under either budget proposal, the Office of Higher Education will have to ration the existing funds by issuing smaller and/or fewer grants.

In his veto letter, Governor Dayton describes the legislature’s deep cuts to higher education as “unacceptable.” However, since the Governor’s budget also reduces spending, it seems certain that higher education will be cut in any final budget agreement, harming the state’s ability to produce the workforce that is key to our future economic success.

-Christina Wessel & Scott Russell


Cuts-only approach jeopardizes affordability and access to higher education

May 13, 2011

Today, Way Fifteen of the 20 Ways in 20 Days Campaign looks at how a cuts only approach to meeting Minnesota’s needs will jeopardize affordability and access to higher education.

Proposed Cut: The House and Senate have proposed a 14 percent cut for higher education – which will result in the lowest level of funding in over a decade.

Consequence: Over the last decade, tuition costs across the state have risen steeply. At the University of Minnesota – Morris (UMM), tuition has doubled since 2001. The average student debt is now over $20,000. Lucas Felts, a sophomore and economics major at UMM, is deeply worried about his ability to afford a higher education.  “Each year as tuition rises, I am facing more and more debt upon graduation.  I have increasing anxiety over how I will make ends meet with crippling higher education debt repayments looming.”

Today, a college education is necessity to get a good job. Opportunities for quality higher education build the educated workforce that has historically contributed to Minnesota’s economic success. But proposed spending levels are down while enrollment has increased significantly, forcing colleges and universities to raise tuition, cut course offerings, or both. Proposed cuts will put higher education out of the reach of many Minnesotans, leave Lucas and many others without the opportunity to obtain the affordable higher education enjoyed by past generations, and make it more difficult for employers to find the skilled workforce they need.

The Solution: Let’s protect Minnesota’s communities, residents and quality of life. We cannot afford to take a cuts-only approach to meeting our state’s needs, jeopardizing affordability and access to higher education. Minnesotans know we need a balanced approach, one that includes raising revenues based on ability to pay, in order to maintain critical state services that support Minnesotans in tough times and invest in our future.

  • For more information about the cuts to higher education and their impacts on students, contact Josh Winters with the Minnesota Public Interest Research Group (MPIRG) at (612) 627-4035.
  • For more information about the 20 Ways in 20 Days Campaign or Invest in Minnesota, contact Leah Gardner at 651-757-3063.
  • Download the PDF version of this story to spread the word about the impact of proposed budget cuts.

-Leah Gardner


Funding for higher education falls to FY 2002-03 levels in Dayton’s budget

February 25, 2011

Minnesota’s current investments in higher education will play an important role in the future economic success of our state. According the Department of Employment and Economic Development, “the state is continuing to shift towards a skill-based economy. National projections indicate that 70 percent of jobs in Minnesota will require a post-secondary degree by 2018, up from the current 40 percent.”

Governor Dayton’s budget includes $171 million in spending reductions for higher education, or a six percent cut from base funding for FY 2012-13. As a result, the state’s level of investment in higher education would fall to FY 2002-03 funding levels (and that’s in actual dollars, not inflation-adjusted).

The Governor’s budget proposal protects the State Grant program, but cuts other financial aid opportunities.

  • There are no reductions to the State Grant program, which provides financial aid for approximately 85,000 low- and moderate-income Minnesota students every year. However, demand for financial aid is projected to exceed the available funding by $35 million in the next biennium. To ensure the available funds are able to stretch further, the Governor recommends that the student share of expenses be increased slightly and that families pay an additional surcharge on their share.
  • There is a 33 percent reduction in funding for state-funded work study, which pays 75 percent of wages for qualifying campus and community jobs that allow students to earn money to pay for the costs of higher education. Approximately 2,600 fewer students would have a work study opportunity in FY 2012 as a result of the proposed cut.
  • The Governor proposes a five percent reduction to the American Indian Scholarship program, resulting in 32 fewer students being able to access this financial assistance each year.
  • There is a five percent reduction in child care assistance grants for low-income students. As a result of this cut, 150 fewer students a year would receive financial assistance to pay for child care, meaning that they would work more hours, incur more student loans or take longer to graduate.
  • The Achieve Scholarship program is eliminated. This scholarship program was designed to help high achieving, high-need students access higher education, with an average annual scholarship of $2,568. Approximately 130 students would be impacted.
  • The Governor phases out all general fund support for the Minnesota College Savings Program, which helps low-income families save for college expenses. Approximately 2,500 families will no longer receive a state match on their savings.

The Governor proposes a six percent reduction in base funding for the University of Minnesota and the Minnesota State Colleges and Universities (MnSCU).

  • There is a $77 million cut to the University of Minnesota, bringing funding below FY 2010-11 levels. Back in 1978, the University was received 43 percent of its budget from state funding, that percentage has fallen to 18 percent. University of Minnesota president Robert Bruininks testified before the House Higher Education committee that to absorb the proposed reductions, the University is likely to continue to freeze wages, reduce employee benefits and shed staff wherever possible to minimize increases in tuition. Bruininks warned that we have benefitted from “six generations of greatness, and we could lose it in a few bad years.”
  • There is a $76 million cut to MnSCU in FY 2012-13, bringing funding down to FY 2003 levels, even though the system is serving nearly 38,000 more students. Years of budget reductions has resulted in state per student spending in the MnSCU system falling from an average of $4,877 per student in 2001 to $3,832 per student in 2011.

-Christina Wessel


Senate moves quickly on first phase of its plan to balance budget

March 8, 2010

The state Senate has started to lay out the details of the first phase of its budget balancing plan. At a Senate Finance hearing Monday morning, committee chairs presented their budget proposals for higher education; the judiciary; environment, energy and natural resources; and agriculture and veterans affairs. The Senate’s proposed reductions are similar to the Governor’s supplemental budget, although there are some important differences.

Higher Education. The Governor proposed a $53 million reduction to this budget area in FY 2010-11, while the Senate proposes a $48 million reduction. Both the Governor and Senate would cut funding for the University of Minnesota and Minnesota State Colleges and Universities (MnSCU) to the maximum level allowed under federal restrictions connected to accepting stimulus dollars. Funding would be reduced to 2006 levels, resulting in a $36 million cut to the University of Minnesota and a more than $10 million cut to MnSCU in FY 2010-11.

However, the Governor and Senate differ significantly on reductions to financial aid programs. The Governor proposes a $2.3 million permanent reduction to the Minnesota State Grant program, eliminates the 9th semester of financial aid eligibility and ends the Summer Transition Grant program (which helps students pay for summer courses to improve academic skills before they enter college). The Senate does not cut base funding for the State Grant program, keeps the 9th semester of eligibility and partially preserves the Summer Transition Grant program. However, both the Governor and Senate would institute some rationing in the State Grant program to address a shortfall (students and families would be asked to contribute more to the cost of college) and both cut $2.5 million from the State Work Study program (these were new resources just approved last session).

Judiciary. The Governor proposed a $18 million reduction to this budget area in FY 2010-11, while the Senate proposes a $19 million reduction. In general, the Senate proposal cuts the judiciary by 1.7 percent in FY 2010 and by 3.4 percent beginning in FY 2011. As a result, the Senate would cut more from the Supreme Court, Court of Appeals, District Courts and Public Defense Board than the Governor’s proposal. However, the Senate recommends smaller reductions to Civil Legal Services, the Court of Appeals and the Tax Court.

Environment, Energy and Natural Resources. The Governor proposed a $15 million reduction to this budget area in FY 2010-11, while the Senate proposes a $19 million reduction. The Governor’s proposal relied on a number of transfers from special revenue accounts. The Senate felt many of those proposed transfers were not appropriate, so the committee had to look at deeper spending cuts to meet its target. As a result, under the Senate proposal, most areas of this budget received a three percent reduction in FY 2010 and a permanent eight percent reduction beginning in FY 2011.

Agriculture and Veterans Affairs. The Governor proposed a $5.7 million reduction to this budget area in FY 2010-11, while the Senate proposes an $8.0 million reduction. Both the Governor and Senate avoid reductions to the Military Affairs and Veterans Affairs departments. The Senate also adopts most of the Governor’s reductions to agricultural grants and programs. The Senate, however, proposes to significantly delay a portion of the ethanol payments to providers (saving $6.6 million per biennium beginning in FY 2010-11). These payments would be repaid at some point in the future. The Governor proposed a one-time $1.7 million cut in ethanol payments.

The Senate Finance Committee is expected to take up the economic development, public safety, transportation and state government proposals on Wednesday. All of these budget areas are being combined into a single budget bill.

-Christina Wessel

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Governor’s budget cuts higher education as demand increases

February 17, 2010

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.

-Christina Wessel

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