Without budget deal, U could close its doors

K.C. Howard

Facing a possible state government shutdown, University officials are developing contingency plans to avert the worst: closing the University.

“We’re taking a look at staying open the first summer session,” said University President Mark Yudof.

Although University officials are optimistic the Legislature will approve state agency financing and maintain there is no reason to panic, they will meet tomorrow to assess the financial future and pinpoint possible backup plans.

If the governor doesn’t sign a higher education omnibus bill by midnight on June 30, the University and other state colleges will start dipping into reserves – if they have any.

“The state is in a tougher spot than the University of Minnesota is, because we can go for a while on what we call working capital,” said Richard Pfutzenreuter, vice president for budget and finance. Working capital consists of tuition money and federal grants among other funding sources.

He envisioned three scenarios for the University’s future, the worst possible being “scorched earth,” in which the Legislature does not pass a higher education appropriations bill until September or October. In such a case, the University would have to look at shutting down.

“It’s a ways off before we get to that,” Pfutzenreuter said.

The second possibility is that the Legislature could pass appropriation bills before the deadline and all agencies would receive their respective funding.

In the last scenario, the government does not reach a solution for a week or two after deadline, and in that case, the University could
withstand the finite period without state funding.

The University receives one-third of its budget from the state, and officials don’t yet know how long the institution can remain open without state funds.

Basically it’s all in the Legislature’s hands, Pfutzenreuter said.

The Higher Education Conference Committee approved the higher education bill last week, and it awaits legislative approval Thursday. But Gov. Jesse Ventura has sworn he will not approve any appropriation bills until he signs the tax bill.

“The governor will not be blackmailed or pressured into signing bills that are not good public policy just to avoid a government shutdown,” said John Wodele, Ventura’s communications director.

Senate and House leaders are locked in a stalemate over $900 million in tax relief. They reached a deal last month, but Senate DFLers and House Republicans are arguing over commercial and industrial property tax reductions and state business tax proposals.

“There isn’t a lot they’re disagreeing on, it’s just the kind of policy that’s not lending itself to compromise,” Wodele said.

 

K.C. Howard welcomes comments at [email protected]