DULUTH – University of Minnesota President Joan Gabel is asking the university system to pay off $6.8 million in debt at the Duluth campus — though it won't affect the $5.2 million in budget cuts set to take effect next year.
"It will help to put them on a much firmer financial foundation for the future so that they can begin their strategic planning … with a fresh start," Gabel told the Board of Regents on Friday morning.
UMD has not had a balanced budget since 2011, when enrollment started to decline. Its unaddressed budget deficits have accumulated to about $6.8 million.
Chancellor Lendley Black said he was "extremely pleased" to get the debt wiped out with the one-time payment.
"President Gabel has indicated over the past few months that she will partner with UMD to address our budget challenges," Black said in a statement. "It is clear that she recognizes the difficult budgetary decisions we have made at UMD to balance our recurring (operations and maintenance) expenses and revenues."
UMD administrators announced last week that the School of Fine Arts would merge with the College of Liberal Arts, and dozens of jobs would be lost and positions cut across campus as part of the 3% annual operations spending decrease. The UMD faculty senate has called the school merger "an extreme plan."
Twenty-nine faculty and staff positions will be cut or reduced, along with 13 graduate teaching assistant positions, while more than 30 jobs will be eliminated through closing open positions and early retirements.
The $5.2 million in cuts, which take effect in July, are meant to address a recurring deficit that had ballooned to $9.4 million in 2014.
Also facing budget imbalances this year within the university system, whether due to decreased revenue or increased costs, are the Law School, MN Extension, the Veterinary Diagnostic Lab, the Community University Health Care Clinic and the Crookston and Morris campuses, according to the university's budget.
Faculty leaders and legislators have argued that the university system needs to spend more on the Duluth campus — on a per-pupil basis, the Twin Cities campus gets twice as much funding.
Rep. Jennifer Schultz, DFL-Duluth, said Friday that while she was glad to see Gabel lend a hand to UMD, she wants to work on "a new budget model to address current inequities in allocating state funding and administrative costs across collegiate units and campuses."
Black last week said that he saw the budget cuts as a way to unlock more support from the system. Gabel's announcement appears to be a step in that direction.
"Eliminating this debt allows for new investments and next chapters to truly focus on the future," Gabel said Friday in a statement.
With the budget reductions and university system assistance, and barring any unexpected changes, UMD would have a balanced budget and no deficit-related debt by the summer of 2021.