Minnesota colleges poised to get millions in extra funding but not everything they want

Minnesota lawmakers are poised to give the state's public colleges and universities hundreds of millions of dollars in additional funding — enough to cover many of their requests, but likely not all of them.

With Democrats in control of the State Capitol and a historic surplus, leaders of the University of Minnesota and the Minnesota State system of colleges and universities submitted the largest funding requests in years. Lawmakers, in sometimes pointed hearings, have pushed them to justify why they need more funding amid enrollment declines.

Halfway through the session, higher education advocates say they're cautiously optimistic and still hoping for more.

"I think there still is work to be done there," said Mike Dean, executive director of LeadMN, which represents students at two-year colleges. The group is hoping this will be the year that lawmakers enact a program to provide free college tuition for more Minnesota students.

Lawmakers' decisions in the coming months will determine how much money the systems have to work with as they craft their budgets for the coming school year. That will guide, among other things, how much students pay in tuition, how many staff and programs they keep and how many services are available to address mental health and safety concerns.

Leaders at the University of Minnesota and Minnesota State have told lawmakers they expect they will have to take steps to reduce their costs, even if they were to get their full funding requests.

The Minnesota State system has asked for about $1.9 billion over the next two years, a $350 million increase, the largest it has ever requested. The University of Minnesota has asked for nearly $1.7 billion over the next two years, a roughly $300 million increase, its largest in at least 25 years. They say they need additional funding to help blunt the impacts of inflation, to freeze tuition for some students and to help address enrollment declines.

The U also asked for money to help cover a larger-than-expected tuition shortfall, much of which happened at the Twin Cities campus. Administrators have said they believe a number of factors may have contributed, including: a decline in retention rates, an increase in the number of students completing their studies faster, a change in the mix of in- and out-of-state students who pay different rates and smaller freshmen enrollment on four of the system's five campuses.

"We're anxious to get the full ask. We think it's valid, and we think it's important this year," said Myron Frans, senior vice president for finance and operations for the U.

The two systems enroll about 360,000 students combined. The funding uncertainty has left some students and staff on edge, especially at Minnesota State colleges where labor leaders say they have been warned they should brace for cuts.

"I am worried, scared for what the future holds for MinnState and its employees and students," Jennifer Erwin, a leader of the AFSCME union that represents some system workers, told trustees in a public meeting. "The Band-Aids aren't working anymore."

Pointed budget questions

In legislative committee meetings, the systems have faced repeated questions from both Republican and DFL lawmakers who wanted to know more about their efforts to contain costs and to plan for a future where the number of potential students is smaller, in part due to lower birth rates in some years.

"You can't just budget for the here and now," Rep. Peggy Scott, R-Andover, said in a meeting last week. "You have to budget for the future."

Lawmakers have asked both systems to provide data explaining their enrollment declines and what types of cuts they might have to make. Both systems anticipate they would have to reduce costs, even in the unlikely scenario that they were to get their full requests.

"We are not asking the legislature to fund our enrollment decline and our past structural gaps. Our campuses have been managing that," said Bill Maki, vice chancellor of finance and facilities for Minnesota State. Over the course of a decade, enrollment at Minnesota State dropped about 28%, and the number of employees declined about 12%, he said.

Maki said their system hopes to return to an era when state funding covered about two-thirds of their costs, reducing the tuition they need to charge students.

Democratic leaders — many of whom ran on platforms supporting education — revealed their budget targets earlier this week. Their plan called for giving about $2.5 billion in additional funding to early childhood and K-12 programs and an extra $650 million to higher education.

Lawmakers say they arrived at those numbers in part by looking at the different challenges each system faces and the types of other funding resources it can tap.

House Speaker Melissa Hortman, DFL-Brooklyn Park, said she hoped to set aside enough money to increase the number of students who can receive state assistance to cover higher education and the amount of funding they can get.

The chairs of the legislature's higher education committees have until early April to move their first bills aimed at deciding how to divide up that $650 million between the University of Minnesota, Minnesota State and the Office of Higher Education, which also sought more than $100 million in additional funding.

Sen. Omar Fateh, DFL-Minneapolis, has introduced a bill that aims to provide free tuition for more students attending public colleges and universities, if they meet income requirements. Hortman noted that the last time the DFL had a trifecta, lawmakers provided funding to cover a tuition freeze at public institutions.

More money for hospital?

Less clear is what, if anything, lawmakers might do with the University of Minnesota's request for $950 million to help acquire and operate its teaching hospitals amid a proposed merger of Fairview Health Services and South Dakota-based Sanford Health. State officials have so far been treating that as a separate request.

"There is no agreement about whether to give the University of Minnesota money to purchase or operate a hospital," Hortman said. "So, none of the chairs has been instructed to use any portion of their funding for that."

Frans, in a statement issued after the budget targets were unveiled, said U administrators remain "eager to continue conversations with state lawmakers."

"The budget targets may be set," he said, "but there are many bills in front of committees and they still have to work through the specifics."