2% tuition increase approved for University of Minnesota undergrads on Twin Cities campus

Undergraduate students on the University of Minnesota's Twin Cities campus will see a 2% tuition increase this fall — slightly less than what the U administration had sought.

In his final roughly $4 billion budget proposal, outgoing U President Eric Kaler had pitched a 2.5% hike, citing the state Legislature's move to grant only half of the university's proposal and a need to invest more in employee pay, among other new spending. But last week some on the U's governing board, which has pushed back on tuition increases in recent years, urged the president to explore ways to rein in that bump.

After rejecting bids to freeze tuition and only increase it by 1.5%, regents ultimately rallied 9 to 3 on Wednesday around the 2% number. That means Minnesota undergraduate students next fall will pay $15,027 in tuition and required fees. In-state students at the university's four greater Minnesota campuses will pay 1.5% more.

"I think this budget is within the realm of reason," Regent Janie Mayeron said. "At the end of the day, we have to do what's in the best interest of the university."

A regent backlash against tuition increases — even those in line or below the rate of inflation — has gained traction in recent years. Regents such as Michael Hsu have pitched counterproposals to freeze or even slightly reduce tuition since 2015, which the board has handily voted down.

But in 2017, the board backed a 2% in-state tuition hike; Kaler, who had asked for 3%, adjusted the nonresident tuition increase upward to offset that smaller bump. Last year, a third of the board voted against Kaler's 2% increase proposal.

Trustees in the Minnesota State system of universities and community colleges on Wednesday backed a 3% tuition increase.

To make up the $1.6 million difference from Kaler's original tuition proposal, the university will use $900,000 from its cash reserves, which are projected to see a marked increase from interest earned on investments. It also will withhold $700,000 in planned investments in academic departments under Kaler's proposal.

Kaler again voiced concern about dipping into the U's rainy day fund, stressing the need to remain prepared to withstand economic pressures and to give incoming President Joan Gabel some leeway to invest in her own priorities. Kaler, who steps down at the end of this month, has said keeping average tuition increases below the rate of inflation during his eight years at the helm is one of his proudest accomplishments.

"[Gabel] is going to need flexibility," Kaler said. "She has terrific ideas. She wants to do new things."

University officials have said that additional revenue in the fiscal year that starts July 1 will also help cover rising health benefit costs and allow modest investments in several greater Minnesota campuses and the U's extension services, among other spending.

This spring, state lawmakers granted the university $43.5 million more in state funding for the biennium, a 3.4% increase over the $673 million a year it now receives. They asked that the U limit tuition increases to 3%.

Regents Hsu, Darrin Rosha and Randy Simonson wanted to see the university freeze tuition. They argued such a move would position the university for a much more persuasive appeal to lawmakers next spring.

Hsu, who shared with regents a spreadsheet showing how the overall cost of attending the U has risen in the past decade, argued in favor of digging deeper into reserves.

"Here is an opportunity for us to break the cycle and spend some of the money the university has collected," he said.

Regent Steve Sviggum, who favored a 1.5% increase, said the university is still top-heavy despite Kaler's recent efforts to address administrative expenses. He argued the U should trim deeper to free up dollars for keeping tuition lower.

But a majority of the board balked at going with a tuition increase lower than 2%. Many signaled they're losing patience with rising tuition and would expect some bold ideas from Gabel to control it.

This past winter, regents backed a 10% tuition increase for new out-of-state undergraduates on the Twin Cities campus, the latest step in a bid to bring the U from the bottom to the middle of the Big Ten pack for nonresident tuition. Regents also approved a $1,000 per semester tuition surcharge for the College of Science and Engineering in the Twin Cities, to be phased in over four years.