State college system faces 'unsustainable' future, report says

Minnesota's statewide network of public colleges and universities is facing a "financially unsustainable" future and must act quickly to avert a crisis, according to a report released Tuesday.

The report, eight months in the making, blames the slowdown in state funding for the dire situation facing the Minnesota State Colleges and Universities system, which educates nearly 400,000 students a year.

"The financial model for public higher education in Minnesota and throughout our nation has broken down," said Phillip Davis, an associate vice chancellor who co-chaired a work group that issued the report. "We have to act now or the financial challenges we face will only get more difficult."

Officials have been warning that the entire system could face annual budget shortfalls of $66 million to $475 million by 2025 — "truly crisis proportions," according to the report.

The work group, which was assigned to explore the "long-term financial sustainability" of the system, was short on specific fixes. But it signaled that big changes may be in store for the system's 37 colleges and universities.

"Continued cost-cutting by the system, as it exists today, is not the solution," the report said. It called instead for "transformative change." Among the recommendations: Consolidate duplicated services across the state; adopt "more creative and flexible labor practices," streamline the curriculum, and expand "customized training" for businesses.

Trustee Philip Krinkie asked if the group had discussed closing campuses or "drastic reductions in the number of courses we offer," among other options.

Laura King, the vice chancellor of finance and chief financial officer, said the group stopped short of such detailed recommendations to allow time for feedback from the campuses.

Faculty leaders said they were troubled by some of the implications of the report.

"A good deal of what you hear is coded language," said Kevin Lindstrom, president of the Minnesota State College Faculty union. He said streamlining curriculum could make it harder for students to find the courses they want close to home. The problem is magnified, he said, by the possibility of closing entire campuses. "That's an access issue," he said. "It becomes an affordability issue for families."

Several trustees questioned how the changes would save money and wondered why there wasn't more focus on making the case for more state funding.

Officials noted that state funding has increased, on average, only about 1 percent a year for the past decade and that there's little sign it will grow enough to cover expected shortfalls. "What you see is a structural deficit within the year," said King. "We have a financial mismatch."

Chancellor Steven Rosenstone said faculty members, students and others would have a chance to comment on the report over the next few months. He expects to offer his final recommendations to the board in October.

Maura Lerner • 612-673-7384