University of Minnesota President Eric Kaler is asking his governing board to back a 2.5% tuition increase for Minnesota undergraduates on the Twin Cities campus next fall in his final budget plan before he steps down this month.

That's slightly more than a 2% hike he had floated this winter — but not high enough to offset the Legislature's move to grant the U only half the funding increase Kaler had requested, officials said. Kaler's roughly $4 billion budget proposal says additional revenue will help the university offer employees a 2.25% salary increase, pay for rising benefit costs and make other investments, such as more faculty in high-demand programs, campus police officers and student advisers. Undergraduates on the U's four campuses in greater Minnesota would see a 1.5% tuition increase under the proposal.

"It was very challenging to put this budget together," said Brian Burnett, the U's senior vice president for finance and operations. "There is no shortage of ideas to make this university better, safer and stronger, but we had to bring regents a balanced budget."

This spring, state lawmakers granted the U $43.5 million more in state funding for the biennium, or a 3.4% increase over two years. Legislators requested that the university limit tuition increases for resident students to 3% and also called for a report explaining how the U tracks administrative costs, which lawmakers have long tried to scrutinize.

The U now receives $673 million a year from the state, or about 17% of its $3.8 billion budget — a portion that has steadily shrunk from almost 40% three decades ago.

University regents will discuss the proposal next week, when they will also host a Friday forum to hear public comments on it. They will vote June 19. Comments can also be submitted online at

Kaler's proposal says investments in higher employee pay and benefits add up to $75 million. The overall proposed budget is about $4.1 billion, a roughly 3% increase.

"The president's top priority is taking care of our most valuable resource, and that is our people," Burnett said. "We are in a national competition for talent."

He said the university had to make some hard choices: Kaler was earlier hoping to offer a 2.5% salary raise. (The U determines raises based on merit, so most employees will receive less or more than that percentage.) He also wanted to grant more funding to the Duluth campus, where student and faculty leaders have argued they get the short shrift in budgeting in recent years. Campus police in the Twin Cities will get three instead of six additional officers.

State undergraduate students now pay $14,693 a year in tuition and fees on the Twin Cities campus. This past winter, regents approved a 10% tuition increase in tuition for out-of-state students.

U officials note that at an average of 1.6% a year annually, undergraduate tuition increases in the Twin Cities during Kaler's seven years at the helm have remained squarely below inflation.

David McMillan, the governing board's chairman, declined to comment on the proposal Friday before he and his colleagues tackle it publicly.

Regent Darrin Rosha, who has pushed for holding the line on tuition, said a proposal that keeps tuition in line with inflation in the Twin Cities and below inflation on other campuses does not appear unreasonable given the state funding constraints. But he wants the university to do more. He said he would like to see the U come up with a long-term strategic plan that will allow it to rein in further increases.

"I'd like to see us make greater headway on the affordability side," he said.

James Farnsworth, a junior and the Twin Cities student government's chief of staff, said he understands keeping tuition flat after the U failed to get lawmakers' backing for its full funding request is hard. To support that request this spring, he traveled to the Capitol, where he said U leaders still have work to do in building good will with legislators.

But, he said, "It's unfortunate that this has to have such an impact on students. At the end of the day, students feel it."

He said for him, the proposed tuition increases revive lingering questions about what the university is doing to rein in administrative and other costs.

Emma Olson, a political science major in Duluth, said she doesn't have a clear understanding of what the extra dollars the U is allocating to her campus will fund after years of budget cuts there. Two faculty members in her department recently left for other jobs, and she said she understands the role of competitive compensation in retaining employees. But she wonders how well the U is balancing that goal with the imperative to keep the university affordable.

"This tuition hike is coming at a time when many students already cannot afford the University of Minnesota system," she said.

Mila Koumpilova • 612-673-4781

Correction: Previous versions of this article misstated the size of the tuition increase regents approved for out-of-state students last winter.