U Regents OK Plan for 5% Tuition Hike, Layoffs

The University of Minnesota's Board of Regents approved a provisional budget that would take effect if the funding levels outlined in the higher education finance bill that was vetoed by Governor Dayton were enacted-a circumstance described by the school as the "worst-case scenario."

The University of Minnesota's Board of Regents on Monday approved a $3.7 billion provisional budget for its upcoming fiscal year that calls for a tuition hike, layoffs, and significant cuts.

The regents voted nine to two to approve the budget, which was recommended by University President Robert Bruininks, the university said in a news release.

The approval comes at a time when no state budget has been approved, and the state is bracing for a potential government shutdown on July 1. The school's provisional budget is based on the funding outlined in House File 1101-a higher education bill that was vetoed by Governor Mark Dayton and that the university describes as the “worst-case scenario.”

Media reports indicate that most regents disliked the terms of the provisional budget but felt it was the best option available in the absence of more state funding.

Under the terms of the bill passed by the Republican-controlled Legislature, the university would receive roughly $520 million in state funding for each of the fiscal years in its upcoming biennium-down about $71 million, or 12 percent, from last year.

To respond to the potential drop in aid, the school's provisional budget calls for a 5 percent tuition hike for most resident undergraduates and $40.5 million in cuts-including layoffs, eliminating programs, and wage freezes.

“We do not know the number of layoffs at this point in the process,” university spokesman Jeffrey Falk said on Tuesday. “Now that the budget is approved, the university can start examining where cuts can be made.”

The plan also includes $23.2 million in “productivity improvements,” which come primarily through revenue from the current fiscal year that exceeded previous budget estimates.

The Board of Regents' agenda for Monday's meeting states that there is “a reasonable expectation” that Dayton and state lawmakers will arrive at a final budget that allocates more money to the school than outlined in the plan that Dayton vetoed.

The school's provisional budget includes a plan for allocating any state funds it might receive beyond those outlined in House File 1101. One-third would be allocated to reduce tuition costs, one-third would reduce budget cuts to academic programs, and one-third would “minimize impacts expected in the second year of the biennium.”

The provisional budget also notes that a state government shutdown would be “a significant challenge” to the school, which operates year-round and has contractual obligations to multiple funding sources.

“The U of M is well-managed, and like any major business in Minnesota, the university has always been cognizant of the need for plans to protect itself from unforeseen risks, from natural disasters to temporary disruptions in revenue streams,” budget documents state. The school said that it anticipates receiving some state appropriations by the end of June, which were already expected, and it has a contingency plan that is meant to protect key areas, such as students, research, and patient care, in the event of a state government shutdown.