U budget spells out tuition freeze for some, increases for others

Tuition won't rise a dollar for University of Minnesota in-state undergraduates next year under President Eric Kaler's proposed operating budget: $12,060 for the Twin Cities campus, same as last year.

A few fees will climb. Room and board, too. Other students — including out-of-state undergrads — will see increases. But for the first time in more than a decade, the U is not planning a tuition increase for residents.

The freeze fulfills a pledge Kaler made to legislators this year, in return for higher state financial support. It also comes at a time when Minnesota undergraduates are carrying some of the heaviest student loan burdens in the country. A recent state report found that two-thirds of 2010 graduates of the University of Minnesota system took out loans, with an average student debt load of $26,727.

"All told, this budget is a big win for students," said Richard Pfutzenreuter, the U's chief financial officer.

On Wednesday, the university's Board of Regents will hold a public hearing on a $3.4 billion operating budget that makes good on a deal to trade a boost in state funding for a promise to protect in-state undergraduates from higher tuition.

The 2014 operating budget spends about $61 million more than in fiscal year 2013, a 1.9 percent increase. It bankrolls research, more than $2 million in new merit scholarships and a 2.5 percent compensation increase for faculty and staff.

It also proposes a $1,000 tuition increase for nonresidents on the Twin Cities and Duluth campuses, widening what is now a slimmer-than-average gap between the two tuition rates.

The 86-page plan highlights $40.3 million in new investments, including upgrading classrooms, hiring new professors in the Carlson School of Management and expanding national recruiting of "high-achieving students."

It also outlines $10 million of the $15 million in administrative cuts requested by the Legislature.

Among them: Cutting or consolidating a number of positions with titles including directors and assistant deans. U leaders will find the other $5 million in coming months, Pfutzenreuter said during a media briefing Tuesday. "I believe we will exceed $15 million," he said.

The undergraduate tuition freeze funded by the Legislature does not apply to fees. One college-level fee will be capped for the first time in decades, budget officials said, but others will rise. Room and board on the Twin Cities campus will climb 3.9 percent, to $8,312, partly to pay for a new residence hall.

Tuition will rise for many graduate students by 3 percent, a "modest increase," the budget argues. Dentistry students will see a 2.5 percent bump. First-year, resident law students will shoulder one of the biggest increases — 9 percent. That would bring annual tuition to $38,040, not including fees.

About 11,000 students at the University of Minnesota get those need-based grants, and their average award will rise $718 next year, according to the U's budget.

"This is a historic action by the state Legislature and the university," Pfutzenreuter said. "It's the first time I've seen that kind of proactive move to help students afford a college degree."

The U is also adding more than $2 million for "merit-based" financial aid, which is awarded without regard to a family's income. Some of that will be spent to recruit students in Dallas and Washington, D.C.

In recent months, some lawmakers have called on Kaler to widen the gap between the resident and nonresident tuition rates. This budget does that.

The $1,000 hike for out-of-state students on the Twin Cities campus would bring their tuition to $18,310 — a 5.8 percent increase.

The university dropped its nonresident tuition five years ago, becoming the cheapest school in the Big Ten for out-of-state students.

The strategy was meant to attract more undergraduates from elsewhere, as the number of high school graduates in the Midwest shrank. It worked.

"We have increased quite dramatically our nonresident student population, mostly by replacing Wisconsin students, not Minnesota students," said Lincoln Kallsen, director of financial research. "We believe that now is the time that we can start to increase that nonresident differential, because we have a significant market share."