While federal stimulus money saved the state budget earlier this week, other money from the bill could prove damaging to the University of Minnesota in the future. The stimulus package does provide significant funding for education by aiding students and funding research, but the stimulus money could actually hurt the University down the road.
State Fiscal Stabilization Fund
The stimulus plan created a $53.6 billion State Fiscal Stabilization Fund and charged the Department of Education with distributing it to the states based on their population. Minnesota is eligible for $816.5 million of that money, split into two categories: $667.9 million specifically for education, while the remaining $148.6 million can be spent on public safety and other government services, as well as on education. The stimulus package requires the governor to use the $667.9 million to maintain the level of state support to higher education and K-12 until 2011. The $667.9 million more than makes up for cuts made to education under the budget plan currently proposed by Gov. Tim Pawlenty. The proposal cuts $151 million from the University system for the biennium, and $146 million from the Minnesota State Colleges and Universities system , while increasing funding for K-12 education slightly. Richard Pfutzenreuter, the UniversityâÄôs vice president for budget and finance, said itâÄôs hard to know whether the money will be a blessing or a curse. The UniversityâÄôs biggest fear is that lawmakers will cut annual state funding to the University, âÄúbackfillâÄù that cut with federal stimulus money for 2010-2011, and then not replace that money in 2012, Pfutzenreuter said. âÄúWeâÄôd like not to be cut any more just because thereâÄôs federal stimulus money on the table that can replace a cut,âÄù he said. If you take recurring money and replace it with one-time money, then you have to cut budgets or raise tuition in the future to make up for the loss of recurring money, he said. Rep. Tom Rukavina, DFL-Virginia, said he doesnâÄôt think anyone knows yet how the Legislature will use the money as it drafts an omnibus budget bill over the next five weeks. Pawlenty is expected to deliver an updated budget proposal to the Legislature later this month.
Aid for students
While the stimulus plan could cause future financial problems for the University, it is expected to help students in the short term. In 2008-2009, Minnesota students received $19.8 million from the Federal Work Study programs, and that amount is expected to increase by almost $2 million for the next two school years. Because campuses have to match 25 percent of the federal money, students will see closer to a $2.5 million increase because of the stimulus plan. According to the Minnesota Office of Higher Education, the stimulus plan will create about 1,500 jobs in the state through work study programs.
