University of Minnesota seeking $97.5 million more from state for tuition shortfall, proposed freeze

The University of Minnesota is asking state lawmakers for an additional $97.5 million over the next two years largely to cover an unexpectedly large drop in enrollment and a proposed tuition freeze.

The biggest portion of that funding — about $48 million — would help cover a tuition shortfall that Julie Tonneson, the U's budget director, said was unlike any she's seen in her 30 years working for the system.

"Without an increase to our base appropriation in that amount, it would mean significant budget cuts and tuition rate increases, more than we are already contemplating," she told the Board of Regents in a meeting Friday morning.

With the new request, the university now is seeking nearly $1.7 billion from the Legislature to cover its general operations over the next two years. That's in addition to the $950 million it is seeking from the state to acquire its teaching hospitals in reaction to the proposed merger of Fairview Health Services and South Dakota-based Sanford Health.

The request comes at a time when lawmakers are preparing to enter a new phase of budget negotiations. At a committee meeting Tuesday, university officials faced sharp questions from legislators who wondered why the U's projections had been so far off and why administrators hadn't given them additional details to properly vet the request.

"There is a big difference between a need and a want, and right now there is a crisis situation here, with declining enrollment," said Rep. Gene Pelowski, DFL-Winona, who chairs the House Higher Education Finance and Policy Committee and has asked the U to submit additional data to support its request.

The university hasn't yet released data that would show its enrollment projections for each campus and how those numbers changed after the U readjusted its data at the start of a new semester.

Myron Frans, the U's senior vice president for finance and operations, said in an interview Friday that tuition revenue for this year is set to come in around $966 million, some $24 million less than initially anticipated.

University officials have some preliminary ideas about what might be driving the decline. Tonneson said in public meetings this week that enrollment had dropped more than expected at each of the system's five campuses. She also said they've seen changes in the number of credits students are taking and in the mix of in- and out-of-state students, who pay different rates.

The shortfall drew the attention of both Republican and DFL lawmakers. During the committee meeting earlier this week, Rep. Kristin Robbins, R-Maple Grove, peppered U officials for more details, saying "understanding the pace of change and the acceleration is very critical." Rep. Nathan Coulter, DFL-Bloomington, said he "finds some concern" with the request, noting that the shortfall accounts for nearly half of the new ask.

This is the second time this year that the university has asked lawmakers for additional money. Its original budget request included a $205 million increase to cover the costs of inflation, public safety programs and financial aid, among other things.

The U's latest request includes $40.5 million to help cover the costs of a tuition freeze for undergraduate students who live in Minnesota. The original budget proposal had anticipated a 3.5% tuition increase for in-state undergraduate students attending the Twin Cities campus and 1% increases for students enrolled at other locations.

Frans told lawmakers the U didn't initially seek funding for a tuition freeze because administrators wanted to show they were willing to share the burdens of increased costs, and proposed a freeze only after realizing it was a priority for lawmakers. Coulter said he was surprised to hear that U officials were just now learning that lawmakers thought a freeze was necessary.

The remaining $9 million in the U's new request would pay for a scholarship program to cover undergraduate tuition and fees for American Indian students. DFL Gov. Tim Walz had included funding for such a program in his budget proposal.

The governor unveiled a budget proposal earlier this year that included about $1.45 billion in general appropriations for the U. His office said Thursday that he is reviewing the U's new request.