FY2020-2021 Biennial Budget Educating Minnesota?s Talent Board of Trustees October 2018 FY2020-F2021 operating request focuses on: • Serving our current and future students • Protecting our commitment to affordability • Building capacity for innovation 2 Initial consultation has occurred with Minnesota State stakeholders All statewide bargaining units and both student associations have been invited to provide advice • Themes: – Make the case that adequately funding higher education is critical to nurture and sustain Minnesota’s economy – Help address Minnesota’s economic and racial disparities – Stay focused on improving affordability – Improve educational outcomes, student success and advance academic excellence – Replace an out-of-date, unreliable enterprise technology system with one that better serves students – Fund inflationary costs to protect students, programs, and campuses 3 Educating Minnesota’s Talent Campus Investments • Ensure the success of students by investing in essential enterprisewide technology infrastructure and meet Minnesota’s talent needs by providing resources for high-quality, affordable, relevant academic programs Strategic Investments • 4 Strengthen access through tuition strategies and address the workforce opportunity gap through investment in career, technical and professional workforce development ISRS Next Gen is a critical enterprise system investment that must be made • Plays a critical role in the success of our students – from applicant to graduate and nearly every process in between • Serves as the cornerstone data system for our enterprise and requires high security • Touches everyone and nearly every activity: application, registration, course schedule, housing, financial aid, transcripts, system finance, accounting, and HR • Replaces the system’s outdated 20-year old ISRS data system that is reaching its technological end of life 5 Next Gen student record system $ in millions State contribution FY20182019 FY20202021 $8* $8* New support FY20222023 FY20242025 Total $143 $37* Total state contribution $8 $45* $45* $45* System office & college & university contribution $8 $0 $0 $0 $8 Total project investment $16 $45 $45 $45 $151 *State funds added to the base – no additional state funds required in the FY2022-FY2023 and FY2024-FY2025 biennia 6 Campus support in FY2020-FY2021 to preserve programs and services Increase in resources needed for FY2020-FY2021 Compensation increases (salary plus fringe) = Operating cost increases = Address structural gap= Total campus support = 7 $111M $ 38M $149M $20M $169M Strengthening access • Two new scholarship programs targeting enrollment and completion –“Mn State College Promise Program” for new and continuing college students –“Mn State University Transfer Scholarship” for transfer from our colleges to our universities 8 Invest in the workforce opportunity gap • Expand career technical education and professional programming in sectors with high employment growth and demand in sustainable wage occupations • Leverage campus and system capacity for collaborative program development and delivery – Strengthen and expand the K-12 career and technical pipeline and grow K-12 collaborative programming – Strengthen and expand opportunities for adult and incumbent workers • Develop new teacher education pathways in career technical education in support of K-12 and higher education programming 9 Educating Minnesota’s talent - $246 million in new funding over the biennium • $37 million to support ISRS Next Gen, a mission-critical, multi-year technology infrastructure project to replace our out-of-date enterprise technology system and substantially improve the student experience • $169 million to provide high quality programs and fund inflationary costs at three percent each year of the biennium • $25 million in targeted financial support to strengthen access and help our students advance and succeed, especially diverse student groups • $15 million to address the workforce gap through innovative career, technical and professional programming serving business and industry 10 FY2020-FY2021 legislative operating budget request summary $s in millions FY2020 FY2021 FY2020-21 $18.5 $18.5 $37 Campus support $59 $110 $169 Strengthen access $14 $11 $25 Workforce challenges $5 $10 $15 $96.5 $149.5 $246 ISRS Next Gen Total Request FY2021 appropriation continues as base funding into the future 11 Ask for what we need with a commitment from the board to hold undergraduate tuition in FY2020 and FY2021 at FY2019 rates if the request is fully funded. • Leads with a powerful commitment to affordability • Protects our service to students and communities; enables us to help reduce economic and racial disparities; enables us to meet Minnesota’s talent needs; enables ISRS Next Gen and modest investments in innovation • Continues to move the state back towards its historic level of investment 12 Recommended board motion The FY2020-FY2021 legislative request strengthens the state’s commitment to access and affordability, reduces disparities, invests in critical technology infrastructure and supports student success. The Board of Trustees approves the FY2020-FY2021 biennial budget request in the amount of $817,919,000 in FY2020 and $870,919,000 in FY2021 for a total of $1,688,838,000. The Board strongly urges the state of Minnesota to support Minnesota State’s biennial budget request. 13 Recommended board motion, cont’d The Board of Trustees has been granted the authority in state statute to govern and operate Minnesota State. The board, after full consultation with Minnesota State constituencies, will make final budget decisions, including setting tuition rates, at the conclusion of the legislative session. If the legislative request is fully funded, the board intends to hold undergraduate tuition rates at current levels. 14 BACKGROUND Some facts • Between FY2008 and FY2019, state support and tuition revenue combined increased an average of 1.1% per year. • In the FY2016-FY2017 biennium, state support increased 8.2% ($102 million), but net new revenue from both tuition and state support increased only 2.8% ($78 million) due to enrollment losses, rate changes and state funding shortfalls. • In the FY2018-FY2019 biennium, state support increased 7.9% ($106 million), but net new revenue from both tuition and state support is projected to increase only 2.5% over two years ($71 million) due to enrollment losses, rate changes and state funding shortfalls. 16 Minnesota’s higher education funding trails U.S. average significantly State and Local Educational Appropriations for Higher Education per FTE Student from 1997 to 2017 $10,000 $9,000 $8,000 $9,881 $8,489 $8,794 $7,263 $7,000 $7,642 $6,775 $6,000 $5,000 1997 2007 Minnesota 2017 US Source: SHEEO (2017). SHEF FY 17. Constant 2017 dollars adjusted by SHEEO Higher Education Cost Adjustment 17 Despite significant increases, Minnesota’s adjusted investment in higher education is $97 million less than 2002 State appropriation revenue ($ millions) and adjusted for inflation $725.0 $700.0 $675.0 $650.0 $625.0 $601.6 $600.0 $575.0 $550.0 $525.0 $500.0 $475.0 $450.0 $425.0 $400.0 $673.5 $665.9 $600.7 $614.2 $559.6 $545.4 Appropriation 18 $587.9 Adjusted $721.9 The relationship between Minnesota State tuition and state appropriation has changed significantly over the past 15 years 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 66.3% 51.7% 48.3% 51.4% 48.6% 39.6% 33.7% Tuition 19 60.4% Appropriation 53.6% 46.4% 50.9% 49.1% Minnesota’s higher education funding trails U.S. average significantly State and Local Educational Appropriations for Higher Education per FTE Student from 1997 to 2017 $10,000 $9,000 $8,000 $9,881 $8,489 $8,794 $7,263 $7,000 $7,642 $6,775 $6,000 $5,000 1997 2007 Minnesota 2017 US Source: SHEEO (2017). SHEF FY 17. Constant 2017 dollars adjusted by SHEEO Higher Education Cost Adjustment 20 Tuition rates has been restricted by the legislature Fiscal Year 2014 2015 2016 2017 2018 2019 21 Colleges Frozen Frozen Frozen Universities Frozen Frozen Increased overall average of 3.4% Cut 1% Frozen Increased overall average of 1% Increased overall average of 3.9% Frozen Frozen