The University’s Board of Regents will hear an update on the economy from state economist Thomas Stinson today for the first time since news of Minnesota’s nearly $5 billion projected state deficit was released.
Minnesota Department of Finance officials identified the higher-than-expected deficit, which covers the next two and a half years, last Wednesday in its November forecast.
Stinson, who is also an applied economics professor at the University, said he will give the regents an idea of the factors affecting the state’s financial condition, which they can use in making plans for University finances.
“This is a very serious problem, Stinson said. “It won’t be solved without very difficult choices about programs being cut.”
State leaders have said the University will likely receive less than its requested $96 million increase in the operating budget – the lowest request in 10 years.
University President Robert Bruininks said if the University does not receive its full request, students could expect tuition increases beyond the proposed 4.5 percent. In October he recommended tuition be held at that level to raise $46 million in revenue as part of the University’s two-year budget request, which also calls for $50 million in internal allocations.
But regents aren’t ready to push the panic button.
Calling the state’s economic situation “pretty sad,” Regent David Metzen said it was too early to speculate what might happen to the University’s request.
Metzen said Bruininks’ budget proposal is fairly modest, and he believes further tuition increases might not be necessary.
“The model is set up to hold down tuition. We shall see,” he said.
Regent Dallas Bohnsack agreed, calling the University’s request “exactly what (the University) needs.”
“It’s no wish list,” he said.
Regents said they have not discussed a contingency plan if their request is not approved by the state.
Metzen suspects the University might look at addressing any state funding shortfalls this winter when the finance department releases another economic forecast.
Highlighting the University’s contributions to the state including the $530 million in research funds spent in the state should convince legislators not to cut the request, Bohnsack said.
But if the University’s request remains untouched, other areas will have to take larger cuts, leading to more problems for other state agencies, Stinson said.
“There are no attractive solutions here,” he said.
Regents will also review the University’s plan, performance and accountability report rating the institution’s growth toward its priorities: academic excellence, students and facilities.
Schematic plans for the Translational Research Facility are expected to be approved. The building, which is the University’s top project in its supplemental capital request, is expected to use scientific discoveries and create therapies for the prevention and treatment of diseases.
University officials said they still plan to ask the state for a $61 million supplemental budget request, even with the size of the projected deficit. The request includes six vetoed projects from last year’s bonding bill. Normally, the Legislature approves a bonding bill every other year.
“It’s a good time for the state to do (those projects) because the interest rates are low, and construction jobs would be a good shot in the arm for the state’s economy,” Bruininks said last week.