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University Budget Update

5/21/09

The legislative session ended on a note of uncertainty Monday--and the rhetoric and media coverage since have done little to clarify the impact on the University of Minnesota. We continue to face significant economic challenges, both individually and as a community. So at the risk of repeating key messages from the past few months, I believe it is important to provide some context regarding our state budget.

• Make no mistake: the University is being cut substantially. We are facing a cut to our state budget base of 7% or $104M, with a likely additional unallotment that will take us to 13% or $178M. You'll likely hear smaller cuts quoted in the media--these quoted numbers are inaccurate, because they rely on federal stimulus dollars that disappear after 2010-11, leaving the University and the state facing a steep cliff in the next biennium. In other words, the quoted cuts are temporary; the real reduction is permanent.
• Federal stimulus dollars provide essential, but temporary, relief. We anticipate approximately $89M in federal stimulus funds to help us reduce the impact of these cuts during the next two years. By law, stimulus funds are dedicated for specific uses, including mitigating tuition increases, preserving jobs, and maintaining essential educational services. Approximately half of this money will go directly to financial support for students to help cushion the impact of projected tuition increases.
• Despite deep cuts, Minnesota students will be protected. Thanks to our new middle-income scholarship program, new federal stimulus grants, and newly expanded federal tax credits, under current tuition models, 60% of resident undergraduates will actually pay less next year than they paid this year--$1,000 to $2,900 less, depending on family income. The remaining Minnesota students (from families earning more than $160K each year) will experience an increase of just $300 in next year and $450 in 2010-11.
• The U is aggressively reducing its costs. Just five years ago, the University absorbed a cut of $185M or 15% to its state budget base. At that time, we had a number of tools available for managing these reductions, so that despite the cut, we were able to improve quality, productivity, and management at the University. We serve the same number of students now as we did then, and we have grown our sponsored research enterprise and kept pace with rising costs, all with flat or declining support from the state (in real dollars adjusted for inflation). We continue to reduce costs and increase efficiency--and, in fact, next year we will cut $94M in existing costs and reallocate those resources to current and emerging University priorities.

Despite the possibility of an additional unallotment, our original budget planning framework remains intact, and we intend to move ahead with the plans we’ve made over the past year. Past budget updates have outlined a number of cost reduction strategies and real savings we've achieved in recent years. You can expect to hear more in early June as the Board of Regents prepares to consider the University’s budget.

I want to assure you that the University continues to plan not only for the biennium, but also for our long-term future. Our budget principles and priorities--including maintaining our quality and competitiveness, retaining and rewarding faculty and staff, increasing productivity, and improving financial access for students--remain unchanged, because our goal is still a strong University. I am urging our state leaders to proceed with the utmost care, because especially in difficult times, Minnesota must preserve its essential assets and human capital infrastructure. The University of Minnesota is the state’s economic engine. Now is not the time to disinvest in education and innovation--the fuel that will drive future economic growth, competitiveness, and quality of life for Minnesota and its citizens.

Thank you for your ongoing support during these difficult times. I hope you have a great summer, and I urge you to stay engaged and informed through The Economy and the U Web site.

Sincerely,

Robert H. Bruininks

Related links

Budget principles

Government Relations

State Affairs, Legislative Updates

Federal Relations Update

Human Resources

Legislative Network

President's Office

Stimulus funding information
Office of the Vice President for Research

Resources

Employee and Supervisor Support

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