Students attending the University of Minnesota's five campuses this fall may get stuck with a slight tuition increase.

During a Board of Regents meeting Thursday, U President Joan Gabel pitched a 1.5% tuition increase for undergraduate and graduate students at the system's campuses as part of her proposed $4 billion budget for the coming year. The tuition hike, which would generate about $13.5 million in new revenue, would be the first increase in two years; the university froze tuition for most students during the 2020-21 school year in recognition of pandemic-related hardship.

"This proposed budget reflects our commitment to the future, to supporting our students, our faculty and our staff," Gabel told the board. "It reflects the challenges we've faced, the thoughtful adjustments and sacrifices we've made through those challenges, and our commitment to quality."

Undergraduate tuition for Minnesota residents attending the U's flagship Twin Cities campus would increase by about $200, bringing it just above $13,500 per year. Resident undergraduate tuition increases at the Duluth, Rochester, Morris and Crookston campuses would range from $157 to $187.

Nonresident undergrads at the Twin Cities campus would pay about $480 more, with their tuition totaling $32,000 for the year.

Regents will vote on the tuition increase proposal later this month. They also will decide whether the university should take out a loan to cover up to $50 million in losses from the past year.

U leaders said the current budget outlook is much improved from last year, when the university implemented employee furloughs, pay cuts for top administrators and freezes on hiring and pay raises. Many of those measures, along with federal COVID-19 relief funding, helped the university weather a nearly $170 million shortfall.

"Taking these actions over the last 16 months means that we have a smaller and isolated set of COVID-19 issues to deal with going forward," said Julie Tonneson, the university's budget director.

Administrators expect revenue from campus housing, athletics and parking to rebound from pandemic lows as the U resumes classes and other operations in person.

Even so, Gabel's budget proposal includes about $50 million in spending reductions and internal reallocations. The university will use that money, the increased tuition revenue and incoming state funding to help pay for investments in long-term initiatives, annual cost increases and any lingering pandemic expenses.

The proposed level of funding reallocations dwarfs efforts made in recent years, which averaged closer to $20 million, Tonneson said.

Regents generally supported the overall budget proposal and expressed relief about a potential post-pandemic financial rebound.

Some regents, though, were not happy with the proposed tuition hike.

Regents Darrin Rosha and James Farnsworth said they would rather the university trim more administrative costs than make students bear the expense.

"We should not be raising tuition," Rosha said, adding he worries the U could lose students to cheaper flagship universities in neighboring states.

Regents David McMillan and Steve Sviggum said the tuition increase, while not ideal, is acceptable given the university would also be cutting costs and raising employee salaries by 1.5%.

"Our faculty and staff really cooperated and helped us out the last year," Sviggum said, referring to furloughs and pay cuts. "You put that all together and it seems reasonable."

Ryan Faircloth • 612-673-4234

Twitter: @ryanfaircloth