U passes a budget of pain

University of Minnesota officials passed a painful budget Wednesday that presents a new reality: For the first time, the university will rely more on revenue from students than from the state.

The $3 billion budget fills a $81.1 million cut in state appropriations in part by eliminating 5.5 percent of the university's workforce, mostly through attrition.

Using federal stimulus money, it keeps tuition increases for in-state undergraduates to just 3.1 percent. It raises tuition for most graduate and professional students by 7.5 percent.

In all, the budget represents a movement toward more private sources of revenue and an effort to become a leaner institution.

"This problem is not going to go away," President Robert Bruininks said. "We're going to have to continue to balance all these competing issues as we go forward."

Bruininks' recom-mended operating budget passed the Board of Regents 11-1 without revision.

The lone dissenter was Regent John Frobenius, who proposed shaving 2 percent off all graduate and professional students' tuition increases -- a move that would have cost $4.8 million. His motion died for lack of a second.

How tuition increases affect these students is complicated, because they often receive discounted tuition and other funding. Frobenius said the board had not gotten enough information about what these students would pay in the end: "Absent that information, I feel I cannot support this budget."

The budget trims 1,240 full-time jobs from the system's four campuses. That includes 220 fewer faculty members, 280 fewer administrative jobs and more than 700 other student and staff job reductions or "non-renewals."

About 370 -- or 30 percent -- of those will come through layoffs, most of which have already occurred.

"That's going to have an effect on the quality of this institution, whether we want to accept that fact or not," said Regent Steven Hunter.

The U is among the state's 10 largest employers, private or public, said Thomas Stinson, state economist and a professor at the U.

The job cuts are just one part of $94.9 million in budget reductions, which also diminish funding for agricultural experiment stations, libraries and instructional equipment. The university will also rely on more part-time instructors.

Undergrads get break

About 56 percent of the $89.3 million in stimulus funding the university got for 2010 will go toward buying down tuition for in-state undergraduates. The remaining dollars will help "plug some holes" in programs and staff caused by budget cuts, Bruininks said.

While the budget raises in-state and out-of-state tuition by 7.5 percent -- that's $720 for the Twin Cities campus -- at most, undergraduates will pay 3.1 percent more. Add in new scholarships and increased state and federal grants, and 61 percent of in-state students would actually pay less than they did last year.

The stimulus money doesn't help graduate and professional students, most of whom will see a tuition increase of 7.5 percent. First-year, in-state law students will pay 15.3 percent more than their counterparts did last year. Resident medical school students will see an increase of 5.2 percent.

Bruininks said most graduate students don't pay in full; employers, foundations and others contribute. The university will spend nearly $250 million for graduate and professional students next year -- twice what it gives undergrads, he said.

"It's a good story. It's a complex story," he said.

"Where we have big challenges is in those professional programs where students do not have the opportunity to take on teaching and research assistance assignments," he said, such as law and medical school.

In 2005-06, the U's Medical School ranked No. 1 in the nation in resident tuition and fees, according to the Association of American Medical Colleges. In nonresident tuition, it ranked 36th that year.

Last year -- with in-state tuition and fees of $34,623 -- it landed at 4th and 44th, respectively.

State dollars lag

Cuts to the U's funding could be amplified by its share of a $730 million state budget slashing Gov. Tim Pawlenty announced this month to resolve the state's looming deficit. The U now faces an additional $50 million cut that will take effect in fiscal year 2011 -- assuming the Legislature doesn't restore that funding next session.

State funding used to provide half of the University of Minnesota's revenues. Now, it's closer to a quarter.

In 2000, the U received $583 million in its base appropriation from the state -- more than twice what it made from tuition.

Without adjusting for inflation, the state's appropriation looks much like it did a decade ago. When you add in the consumer price index, "we're back to where we were in 1978," Bruininks said Wednesday.

Jenna Ross • 612-673-7168