Friday, April 17, 2009

Higher Education Funding

With the downturn of the economy, most states are experiencing a budget deficit this year according to the Center on Budget and Policy Priorities. Minnesota is not an exception to this trend-the Minnesota Office of Management and Budget came out with the February Forecast at the beginning of March, and the legislature and the governor are going to have to fill a budget deficit hole of $4.6 billion.

In times of economic difficulty, many states, including Minnesota, have resorted to decreasing the amount of funding provided for higher education. This results in higher education institutions having to rely on tuition increases in order to continue normal operations.

Although it remains to be seen what will come of the legislative session as it relates to higher education funding, Governor Pawlenty proposed a tuition cap for the University of Minnesota and the Minnesota State Colleges and Universities system in his State of the State address. Putting a limit on tuition increases would benefit those who pay the tuition, because while tuition could be increased, payments would be guaranteed to not increase beyond a certain amount.

However, tuition caps could also adversely affect the institutions and those who benefit from them. Similar to a levy cap imposed on a local government which decreases the amount of flexibility that a local government has to deal with their budget, a tuition cap imposed on a university would not allow for the university to have flexibility in the options that they have to deal with their budget. This poses a particularly difficult problem in years when the state cuts funding to higher education.

The Minnesota House of Representatives is not proposing to cut any funding for higher education institutions for the upcoming biennium. Because of federal stimulus dollars, the House proposes to maintain the base level funding at approximately $3 billion. In future years, however, the House of Representatives is proposing to cut $122 million, amounting to a 3.9% cut in funding. HF869, authored by Representative Rukavina, is the Omnibus Higher Education Bill. HF869 uses federal stimulus dollars to create a tuition increase cap of $300. Given the ideas put forth thus far, it will be interesting to see how the House, Senate, and Governor will compromise on a higher education plan for the upcoming biennium.

While it remains to be seen what will happen this legislative session with regard to higher education funding, the reliance that Minnesota’s public higher education institutions, the state budget deficit, and the past trend to cut higher education in economic down times suggest that students across the state may be paying more for their tuition moving forward.

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