Dive Brief:
- Minnesota State Colleges and Universities’ board on Wednesday approved a proposal to redirect millions of dollars in system funding to struggling universities.
- The plan will reallocate up to $25 million annually for four years from the system’s 33 colleges to any of its distressed institutions. At the meeting, Bill Maki, the system’s vice chancellor for finance and facilities, said the funding was necessary given that the institutions couldn’t cut costs quickly enough to shore up their cash needs.
- In fiscal 2027, St. Cloud State University is expected to receive a projected $10 million under the measure and Bemidji State University is expected to get $4.9 million, according to a meeting document.
Dive Insight:
St. Cloud State and Bemidji State have gone through multiple rounds of budget cuts already, one of the criteria for receiving the funds, Maki noted.
Two and a half years ago, for example, St. Cloud State moved to slash nearly four dozen academic programs while cutting 57 faculty and 46 staff positions. A few months later, Bemidji State cut two academic programs and 14 faculty positions.
Maki said that the current fiscal year has been even tougher than expected for challenged universities. He pointed to a $35 million reduction in base funding from the state for the system, which he described as “more of a worse case scenario for institutions that were already struggling financially.”
He also noted inflation has turned out to be higher than expected, while federal policies have contributed to a decline in international students.
The system will determine if a college receives the transitional funds based in part on its Composite Financial Index indicator, a calculation used to measure an institution’s health. Under the system’s projections and new plan, a handful of institutions with relatively lower cash balances would contribute proportionally less to the transitional funding.
The transition funding proposal as a whole was developed with input from a “think tank” of leaders within the Minnesota State system, including the presidents of several of its colleges.
Some presidents of other Minnesota State colleges spoke in favor of the measures but also described the financial burden on their own institutions.
“We are spread very thin. There’s not a lot of margin left that we have to play with,” Edward Inch, president of the Minnesota State University, Mankato, said at the meeting. “This is the least damaging course of action that we can take recognizing that there is a price to be paid for the whole system in order to stabilize institutions that are in real difficulty.”
The reallocation plan was part of a suite of proposals meant to strengthen the system’s financial sustainability.
Another important part of the system’s financial strategy is building demolition, Maki said. The board approved a measure Wednesday that allows the system to redirect half of its annual $7.3 million equipment budget toward building demolition.
“Many facilities across the system are significantly underused or not used at all, and it would be prohibitively expensive to make them fully usable,” a meeting document explained. “These facilities require ongoing funding to maintain them to safeguard campus activity and demolishing them will achieve net savings for college and university budgets.”
As part of the package passed Wednesday, the board also approved a proposal to direct $1 million toward systemwide shared services for cybersecurity, procurement and contract management, and application and financial aid processing. That measure, too, is meant to save costs.
As the system as a whole struggles with enrollment pressure, inflation, funding shifts and other challenges, it could move to close campuses in the coming years.
“I think we probably will have some campuses that close … but not institutions,” system Chancellor Scott Olson told The Minnesota Star Tribune in September. “What would probably happen to institutions is that they would align or merge.”
Some campus consolidation is already in the works, including plans to close Minnesota State Community and Technical College’s Detroit Lakes Campus and for Northwest Technical College to relocate to the Bemidji State campus.
