University of Minnesota provides new details on tuition shortfall

Tuition revenue at the University of Minnesota's Twin Cities campus is likely to come in $17.3 million less than administrators initially expected, according to new data presented to lawmakers this week.

The university's flagship campus accounts for nearly three-quarters of the $24 million shortfall that administrators reported while seeking hundreds of millions of dollars in additional state funding.

The new data was released at the request of representatives on the Minnesota House's Higher Education Committee. Declining enrollment is a top concern for lawmakers, who are trying to understand both why it's happening and "how we can help," said Rep. Gene Pelowski, DFL-Winona, who chairs the committee.

The discussion is happening at a time when state officials are entering a new phase of budget negotiations. The university has asked for about $1.7 billion to help cover its general operations over the next two years, a roughly $302 million increase. Proposals by Gov. Tim Walz and the Senate include closer to $1.5 billion. Pelowski said the House will unveil its initial proposal next week.

The university is also seeking $950 million to acquire its teaching hospitals amid a proposed merger of Fairview Health Services and South Dakota-based Sanford Health.

In a meeting of the House Higher Education Committee on Thursday morning, representatives asked the university's budget director to explain what factors were affecting the drops in tuition revenue and what the system is doing to respond to the concerns. The answers left some lawmakers appearing to want more.

"What is the university doing to change the trajectory?" asked Rep. Kim Hicks, DFL-Rochester.

Myron Frans, the U's senior vice president for finance and operations, said in an interview Thursday afternoon that he is meeting with the president and chancellors on each campus to develop ways to address the shortfalls.

"We're not looking to close or anything like that," Frans said. They are trying to decipher: "Are these anomalies or are they trends? How do we adjust for them in the future?"

The new data showed how much tuition revenue had dropped at each of the system's five campuses compared to initial projections. While the decline at the Twin Cities campus was the largest in terms of raw dollars, it represented a roughly 2% decline, the smallest percentage change in the system.

The widest swing happened at the Morris campus, where tuition revenue came in about 19% — or $2 million — less than initially expected.

Rep. Kristin Robbins, R-Maple Grove, asked for an explanation of what was happening at each of the system's five campuses.

Julie Tonneson, the university's budget director, said each campus has seen a decline in retention, with more students leaving partway through their studies. She said some students have reported struggling with income, health problems or child care, while others appeared to be entering underprepared for college studies.

Tonneson said more students are graduating earlier and taking fewer credits, and there has been a decrease in the number of students transferring into the university from community colleges. Four of the system's campuses have enrolled smaller freshmen classes, while the Twin Cities campus has in recent years admitted some of its largest. She and Frans said they've also seen a change in the mix of in- and out-of-state students, who pay different rates.

The university hasn't yet released more detailed data that would show how those factors are playing out on each campus. Frans said the university is working on that analysis as part of its budget process.

Lawmakers have also been asking the university for more information about its tuition rates as they encourage administrators to freeze or lower costs.

The university said it would need $223.5 million of its requested $302 million increase to freeze tuition for resident undergraduate students. With a smaller $135 million increase, the U said resident undergraduate students on the Twin Cities campus would likely face tuition increases of 6.5% to 7.5%, while students on other campuses would likely face increases of 3% to 4%.

"Under all scenarios, there will be spending reductions and increases in the nonresident, graduate and professional tuition rates," the university wrote in a letter to lawmakers.