One of the first big tasks that confronted new University of Minnesota President Eric Kaler was deciding how to use an unexpected $50 million over the next two years.
The University passed its 2012 budget in June based on a worst-case estimate on funding from the state Legislature. But at the conclusion of the government shutdown in mid-July, Gov. Mark Dayton signed a bill that allocated an extra $50 million to the University for the biennium.
Kaler outlined his plan Thursday that will use the money to reduce the burden of tuition on students, hire additional faculty, pour some money into graduate school programs and make other investments around the University.
âÄúIt was a good problem to have,âÄù Kaler said.
The Board of Regents unanimously approved KalerâÄôs budget Friday at its first full meeting of the school year.
Kaler followed the benchmark set by former President Bob Bruininks over the summer by using one-third of the extra money toward helping students with tuition.
In his budget, Kaler dedicated $8.3 million to reduce a planned tuition increase for students in 2013 from 5 to 3.5 percent. He also set aside $4 million for the UniversityâÄôs Promise Scholarship, given to about 13,400 low- and middle-income in-state students each year. On average, that will give an extra $310 to each scholarship recipient in spring 2012.
Although Regent Laura Brod said she supports the Promise Scholarship, she expressed concern about how KalerâÄôs budget financed it.
âÄúTo me, if youâÄôre going to give somebody that scholarship, itâÄôs an ongoing expenditure, and theyâÄôre using one-time funds,âÄù Brod said. âÄúYou canâÄôt promise somebody [scholarship money] one year and remove it the next and expect them not to call that an increase.âÄù
Regent Steve Sviggum echoed Brod and said he worries about the âÄúcontinued movement towards raising tuition on all students and giving [scholarship] dollars to some.âÄù
Brod and Sviggum, both new appointees to the board and former Minnesota state representatives, nonetheless voted in favor of KalerâÄôs budget amendments and applauded his work.
University student and Promise Scholarship recipient Foday Momoh said he was happy with KalerâÄôs tuition decisions.
âÄúI think every little bit helps with financial aid,âÄù Momoh said. âÄúIf [the scholarship] is going to increase in just spring, thatâÄôs fine with me.âÄù
It was important to pour a significant amount of money into tuition but still invest heavily elsewhere, Kaler said. He thinks he found the right balance.
âÄúItâÄôs not a matter of coming to the University for as cheap a tuition you can get, but itâÄôs our ability to deliver a high value education when youâÄôre here,âÄù Kaler said in an interview.
Roughly $4 million will be spent to hire about 30 faculty members through 2015, said Julie Tonneson of the Office of Budget and Finance.
More faculty means smaller class sizes, which Kaler said might be a better investment for students than using that cash to further soften tuition prices.
The Medical Education and Research Costs program, which helps fund on-site medical training for University students, will receive about $3 million to offset budget cuts from the state.
âÄúThe direct appropriations werenâÄôt just cut by 10 or 15 percent. It was simply wiped out,âÄù said University Chief Financial Officer Richard Pfutzenreuter. âÄùWe think that was a mistake.âÄù
Another $6 million will be funneled into the Doctoral Dissertation Fellowship, a scholarship that Kaler himself received. The extra money will help another 45 or 50 doctoral candidates in their final two years working on their dissertation.
Kaler kept about $23 million of the biennial funding in the bank to save for investments in the future or to cushion any cuts that may come in 2013.
âÄúThere is an uncertainty in the economy,âÄù Pfutzenreuter explained Thursday, triggering low laughter around the boardroom.

âÄîGreta Kaul contributed to this story.