Surplus could lead to extra funding

The true amount available for higher education depends especially on inflation.

Courtney Blanchard

The budget forecast for the 2008-09 state budget is good news for Minnesota, with a projected $2.17 billion available over two years, according to a report issued Wednesday by the Minnesota Department of Finance.

This could mean a change in higher education funding, with more money available for projects and funding for the University. However, this is all dependent on how legislators decide to spend the money.

State officials warn the numbers aren’t as good as they look and, because inflation was not included in the budget outlook, less money is available than it appears.

In a news release, Peggy Ingison, commissioner of finance, said, “The last thing we want to do is adopt a budget that will create a shortfall when we begin considering the 2010-11 budget in a little more than two years.”

University-area DFL Rep. Phyllis Kahn said, “The numbers aren’t as good as we’d hope they’d be … but it was the happiest gloomy meeting that we’ve ever had.”

Next session, Kahn will chair the State Government Finance Committee. She said while a budget surplus is always good, the outlook doesn’t include inflation or other complicating factors, such as the money that will be shifted around by the transportation amendment adopted to the Minnesota Constitution after the midterm elections.

Kahn said inflation will take a significant part of the surplus away.

“You eat inflation by firing people or buying less,” she said, adding that this could be a problem for University funding. The University is very salary-dependent, which makes it hard to cut corners with funding, she said.

Kahn said there are still unreleased reports from the consolidated funds budget that could bring in new “chunks of money” for the state. Also, the Health Access Fund, which doesn’t compete with other areas of funding like tuition, can be used to insure children across the state, Kahn said.

“I’m optimistic that things will certainly be better than they have in the past,” she said.

DFL Rep. Alice Hausman, who represents the area including the St. Paul campus and will chair the Capital Investment Committee, said a significant factor in the budget outlook is that nearly $1 billion is money that will only be available one time.

Because the money is only available one time, she said, it’s unwise to spend it to grow programs like education and health care, which need yearly funding. Instead, investing in building projects while the extra money is available is the smartest way to spend the surplus, she said.

“When we have an economic upturn, we ought to be thinking thoughtfully, ‘how do we use this economic good time to prepare us for economic bad times?’ ” Hausman said.

At the University, some projects under consideration for bonding money in 2008 include the renovation of the Science Classroom Building and the move of the Bell Museum to the St. Paul campus.

Hausman said the biggest risk to these types of capital investment projects is the push to rebate surplus money to taxpayers.

During Gov. Jesse Ventura’s administration, she said budget surpluses were rebated to taxpayers.

“I think most people would be hard-pressed to remember they got the check,” she said. “That shows how small the checks are in the lives of people.”

Hausman said she will make the case for capital investment at the Legislature, but said the outlook looks good.

“I think there will be a fairly strong move to think more thoughtfully about it this time, rather than automatically say ‘let’s put it into rebates,’ ” she said.