U’s state funds may decrease

Brett Martin

University President Nils Hasselmo recently told the University Senate that he foresees less state funding for the University in 1998-99 than in the past two years. But a key member of the Legislature’s University funding committee calls his projections “unrealistic.”
In the University Plan, a framework for University spending until the year 2000, Hasselmo estimated the University will get about $940 million in state funding for 1998-99, which is $60 million less than the current biennium.
The plan uses the Higher Education Omnibus Appropriations Bill, H.F. 1856, to predict the amount of funds the state will give to the University for 1998 and 1999.
“H.F. 1856 envisions a much lower level of funding from the state,” Hasselmo told an April 18 meeting of the University Senate.
Other administrators voiced the same sentiments.
Richard Pfutzenreuter, associate vice president for the Office of Budget and Finance, said the bill “sets parameters” and puts limits on the ’98 and ’99 state funding.
But Rep. Becky Kelso, DFL-Shakopee, who leads the Legislature’s University of Minnesota Finance Division and co-authored H.F. 1856, disagrees.
“I can’t imagine that we are going to give the University $60 million less” than last year, she said. “There is no reason to think they will get less funding.” In fact, she said, the legislation doesn’t give dollar amounts for 1998-99. The bill only designates the funding for the University in biennials, and ’98-99 falls within the next biennium.
The figures presented in the University Plan are technically true, Kelso said, but “in reality it would be extremely unlikely” that the University would suffer such a draconian reduction in funding.
The figures in Hasselmo’s plan for 1998-99 are speculation, Kelso said, and a person “can’t do long-range planning on two-year bills.”
The University Plan, Kelso said, uses the base funding for the years 1996-1997. It does not include any additional funding, which was included in her bill, that might be designated as renewable by the Legislature.
The legislation awarded a total of nearly $1 billion in funding — some of it renewable — to the University for 1996-97.
About $60 million of that money was one-time funding that might not be renewed in the following years.
Gov. Arne Carlson insisted on the one-time funding so the money would not automatically be included in the base of the next biennial, Kelso said, adding that the governor wanted to avoid ongoing financial commitments.
In addition to noting the projected $60 million shortfall, Hasselmo’s plan also states that overall, the proportion of the state budget spent on higher education — which plays a major role in financing education at the University — has decreased by 21.5 percent since 1987.
Given this decline, Hasselmo wrote in the plan, “state support for public education will not increase in real terms … and tuition levels will increase faster than the overall inflation rate.”
Indeed, tuition has increased faster than inflation during the past several years. The regents approved increases Friday that will raise revenue from tuition by 7.5 percent.
Doug Berg, a financial analyst for the Minnesota House of Representatives, said the increase in tuition approved Friday was first proposed by the Board of Regents in September 1994. The proposal called for a tuition increase of 5 percent along with an increase of state funds.
This type of planning is usually done three years in advance, Berg said, and the regents later changed their proposal, asking for $10 million from the state and only a 4 percent increase in tuition.
Berg said Carlson included as part of his budget in 1995 a restriction on tuition increases along with a reduction in state funding. The proposal was not accepted by the Legislature.
The latest tuition increase was not proposed by the regents, it was proposed by the administration, said Regent Hyon Kim said.
“We painfully approved the biennial budget” that called for increased tuition, Kim said. She added that she was against the 7.5 increase, and wanted a 5 percent increase instead.
The lack of state funding as presented by Hasselmo was a reason for the raise in tuition, Kim said, adding that cooperation is needed from both students and the governor to satisfy the University’s financial needs.