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MnSCU feels financial pressure as enrollment drops

ST. PAUL — Minnesota’s largest higher-education system is looking to make major changes as enrollment continues to fall and more institutions fail financial stress tests.

The Minnesota State Colleges and Universities system saw enrollment fall by 1.9 percent last year, to 138,973. The number of credits taken by students fell by 3.8 percent.

Meanwhile, employee compensation costs are higher than expected, and lawmakers have barred MnSCU from raising tuition next year.

“There is tremendous pressure on our colleges and universities,” MnSCU chief financial officer Laura King told trustees Wednesday. “It will continue as long as we continue to do business the same way.”

Chancellor Steven Rosenstone appointed a work group in October to come up with ideas for improving the system’s long-term financial sustainability. Trustees will review their recommendations in June.

MnSCU projects that without major changes, its annual deficit will grow to between $66 million and $475 million by 2025. Its budget this year was close to $2 billion.

“Doing nothing here is simply not an option,” Rosenstone said.

About one-third of the system’s 31 institutions are in particularly bad shape.

Last year, 11 were subject to close monitor by the system office for failing financial stress tests.

This year, that number is up to 19 — six of the seven state universities, plus 13 technical and community colleges.

King said a few of those schools do not have systemic problems. But, she said, “we’re working really hard with (about half) because they’ve had tremendous pressure.”

The schools have limited options for raising revenue. The Legislature last year awarded the system an extra $121 million on the condition that it freeze university tuition and reduce college tuition by 1 percent in 2016-17.

Over the biennium, that decision is expected to cost MnSCU $21 million in lost revenue. System leaders plan to ask the Legislature this spring for the rest of that money, but some trustees want to consider a different legislative strategy.

Trustee Philip Krinkie said lawmakers are unlikely to supplement last year’s appropriations. He said the system might have better luck asking for flexibility on tuition authority.

Trustees Margaret Anderson Kelliher and Louise Sundin suggested that with Gov. Mark Dayton focused on racial inequities, MnSCU should propose pilot projects designed to help more minorities enter the workforce.

“If we aren’t creative … then we’re missing the opportunity,” Sundin said.

Rosenstone countered that MnSCU needs the $21 million to protect faculty, advisers and tutors from layoffs.

MnSCU served 62,800 students of color last year, he said, and “without that foundation in place, we will be doing more damage than anywhere else in Minnesota.”

Nineteen MnSCU institutions are on financial recovery plans and receiving additional monitoring from the system office.

The universities on the plans are Bemidji State, Metropolitan State, Minnesota State University Moorhead, MSU Mankato, Southwest Minnesota State and St. Cloud State.

The colleges on the financial recovery plans include Century, Dakota County Technical, Hennepin Technical, Hibbing Community, Mesabi Range, Minnesota State College - Southeast Technical and Minnesota State Community and Technical.

The other colleges are North Hennepin Community, Northland Community and Technical, Pine Technical and Community, Rainy River Community, Riverland Community and Rochester Community and Technical.

In other developments Wednesday:

Trustees approved a $2,750 raise for Rosenstone, setting his salary at $390,000, retroactive to July 2015. It’s the maximum amount permitted under the board’s salary schedule for administrators.

He also gets housing, transportation and other allowances worth $77,160 per year.

Rosenstone joined trustees to declare support for Ridgewater College President Doug Allen and Tim Wynes, president of Inver Hills Community College and Dakota County Technical College. Wynes was the subject of a no-confidence vote by the Minnesota State College Faculty union at Inver Hills this week, and Allen was the subject of a similar vote a year ago. 

RELATED STORY: 

MnSCU chancellor issues statement of support for Ridgewater’s Allen

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