Economic forecast could pose a challenge to UMN budget request

Lawmakers responded to February’s prediction of state finances after the govenor’s biennial budget proposals last week.

The Minnesota State Capitol as seen on May 13, 2013.

Bridget Bennett, Daily File Photo

The Minnesota State Capitol as seen on May 13, 2013.

Isabella Murray

Minnesota’s most recent budget forecast indicated economic downturn, which could pose a challenge for the University of Minnesota’s state funding request, officials say. 

The state has a $1 billion projected budget surplus for the upcoming biennium, down nearly $500 million from November, Minnesota Management and Budget officials announced Thursday. DFL Gov. Tim Walz’s recent budget proposes the Legislature allocate $39.2 million of the University’s $87 million requested funding increase over the next two fiscal years.  

“The University will receive closer to $39 than $87 million,” Sen. Jim Abeler, R-Anoka, said. “Nobody anticipated it would be that great of a reduction. It’s going to make our budgeting much more difficult.”

February’s forecast is one of two annual budget indicators released by the state produced by state agencies and economists. 

“This budget forecast signals significant challenges for the future,” said House Speaker Melissa Hortman, DFL-Brooklyn Park, in a statement. “We have to be cautious going forward.” 

David Schultz, a political science professor at Hamline University, said the formula used to calculate the forecast means it’s not a good indicator of where the state is headed. 

“It’s … got all kinds of estimates and guesses about the future, and for too many years the governors and lawmakers took it as gospel as opposed to recognizing the greater margins of errors it actually projects,” Shultz said.”It’s like making a big deal out of the Kardashians but what happens to the Kardashians isn’t really important in the world.”

Legislators use the forecast numbers to inform policies for the remainder of session, which ends May 20.

Abeler said he expected  a decreased economic outlook, though not as drastic as the forecast predicts. 

“People expected half that much. They thought maybe a $200 million dollar [loss.]” Abeler said.  “There’s going to be a lot of pressure on the budget. So even though governor Walz’s initial budget for higher ed was kind of lean, it’s going to be hard to even do that in the end.”

Regent Steve Sviggum said given the state’s surplus, he expected Walz’s proposal to allot more for the University. 

“With a larger surplus, I thought we would have been a higher priority in governor Walz’s proposal,” University Regent Steve Sviggum said.  “I was thinking [the proposal] was a little bit less than what the governor would be recommending, and I hope that he and the Legislature will be able to enhance that somewhat.” 

Walz total higher education proposal makes up $158 million of the state’s nearly $2 billion investment package. 

Senate higher education committee Vice Chair Sen. Rich Draheim, R-Madison Lake, said other needs may take precedent, including health and human services and K-12 education.

“We have to get our spending under control and prioritize and I hope part of that’s for higher ed,” Draheim said. 

Looking ahead, Sen. Greg Clausen, DFL-Apple Valley, said the forecast could hurt higher education funding.  

“I’m sure [Walz is] going to have to make decisions about all budgets. This wasn’t the best news, obviously, today, and what the implication is going to be specifically for the university, we’re going to have to see at this point,” Clausen said.