Friday, May 7, 2010

Minnesota state spending in higher education

Higher education is the service primarily provided by the state governments. This type of financing in Minnesota includes appropriations to the state universities, colleges and funding higher education programs. Minnesota along with 21 states has a 100% state share in state vs. local higher education spending.Compared to other states total spending in higher education Minnesota ranked 20th nationally in 2004-2006 (Table 1). As we see from the table the absolute growth in spending for Minnesota is not significantly high if adjusted to population growth and inflation, and it parallels trends of growths in other states and nationally. In 2004-2006 years Minnesota per capita expenditures ranged from 591 to 660 dollars and the US average expenditure were from 589 to 642 dollars relatively.
Table 1.Minnesota and other states total spending in higher education 2004-2006 (in millions).
State 2004 2005 2006
Minnesota 3,010 3,118 3,402
NY 8,847 9,429 9,770
Texas 13,973 14,955 15,635
US total 173,086 182,268 191,758
Source: Governing's State & Local Sourcebook

In order to see how much of the burden of higher education expenditures Minnesota took from its residents the relation of spending to the personal income was considered and compared to the states and the national average. In terms of personal income Minnesota spent 1.6 % in higher education in 2004-2006.This figure did not change over the period staying quite constant. It equaled with the US average (1.60%) after the US average had declined in 2006.The higher education share in the state budget is steadily declining since 2000 .Based on this data we can make conclusion that Minnesota State financing of higher education relative to other jurisdictions has been strong and strong in recent years. Although, it also does not indicate any significant growth of the State higher education spending neither in relative or absolute numbers in the recent years.
As for the current state expenditures in higher education they are heavily influenced by the Governor`s and the State lawmakers` decisions of reducing the state budget deficit. It is considered to reduce current 1 billion budget deficit through spending cuts in different areas including higher education finance.
Overall, for the current biennium, the Governor’s proposal recommends to cut funding to higher education institutions by $47 million and general fund spending on other higher education programs by $7 million. This is in addition to the $100 million in unallotments on higher education appropriations the Governor implemented in last summer. A few higher education program areas will receive larger cuts. The Governor proposes to permanently reduce the State Work Study program by $2.5 million per year (a 17 percent cut).
The current fiscal policy of the state is to decrease the expenditures wherever it is possible without raising revenues. Cuts in higher education as short term budget solutions may have a long term negative impacts on economic situation in Minnesota. But cuts seem to be unavoidable.

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