Spend a couple of hours talking to people at job centers around Minnesota and you are sure to find many who are responding to layoffs by heading back to school.
That could be good news for Minnesota’s public universities and colleges — if they weren’t facing deep cuts in state funding at the same time they try to serve an influx of students seeking higher degrees and better skills.
As a result of emergency state spending cuts Gov. Tim Pawlenty announced last week, the University of Minnesota and the Minnesota State Colleges and Universities system each stand to lose at least $20 million in funding for the first half of 2009. And they face even more dismal prospects beyond that time frame.
Pawlenty’s fiscal slashing came in response to a recession-driven freefall in revenues. The state faced a $426 million shortfall for the remainder of this fiscal year which ends in June. Cities and counties, human services agencies and state offices also took major cuts.
“These reductions in state spending reflect our priorities to protect funding for K-12 education, public safety, military, and veterans,” Pawlenty said in his announcement.
The higher ed folks aren’t disputing those priorities. But they are arguing that during a recession it is counterproductive to clip the resources that train Minnesota’s work force and fuel innovation.
Recovery in the classroom
“Dramatic cuts to the University erode the quality of the education our students receive and slow the creation of jobs and economic growth for the state by shutting off our human capital and innovation pipelines,” University of Minnesota President President Robert Bruininks said in a statement responding to Pawlenty’s announcement.
In an earlier memo to faculty and staff, Bruininks said: “It is my unwavering belief that the path out of Minnesota’s current crisis, and a return to a vibrant and growth-oriented economy, lies directly through the classrooms, laboratories, libraries, and halls of our great educational institutions.”
The university’s loss actually is much larger than $20 million for the next six months, said its chief financial officer, Richard Pfutzenreuter. Pawlenty’s “unallotment” of human services funding took away another $28 million from a medical education program in which experts from the university trained health care workers in clinical settings around the state. The university counted on the funding to pay the experts’ salaries.
Pawlenty’s take-backs for this fiscal year come on top of a state funding cut of $185 million the university weathered in the post 9/11 recession. This time around, Pawlenty said, the university is cushioned by $15 million in central reserves and $50 million of unspent state appropriations not needed to cover binding obligations.
The higher ed institutions should be able to respond “without dramatic impact on students” because of that cushion, Pawlenty said.
The governor “missed the point” of information the university recently provided to the Legislature, Pfutzenreuter said. True, there is $50 million of unspent state funding, but “that represents money we need to operate the place…pay the phone bills and the general costs,” he said.
“Every part of the institution, every unit, will be impacted,” he said.
As for the $15 million in reserves Pawlenty cited, the university is saving for a “May surprise,” when new information on corporate tax receipts could force another round of state cuts, Pfutzenreuter said.
University officials still are sorting through options for making up this shortfall. Possibilities include halting travel and delaying the purchases of supplies and lab equipment.
But there is a point of diminishing returns from cutbacks in research laboratories.
“Budget cuts of this magnitude not only reduce our operating budget, but also hurt our ability to attract nearly $700 million annually in sponsored research funding and millions more in private support,” Bruininks said.
Dilemma at MnSCU
The sudden loss of $20 million sets up a “real dilemma” for state universities and community and technical colleges in the MnSCU system, said spokeswoman Melinda Voss.
“Our system is the key to the state’s economic recovery because the 32 colleges and universities offer short-term retraining certificate and diploma programs, as well as undergraduate and graduate degree programs, that can help newly unemployed residents retrain for new jobs,” Voss said.
Enrollment was up almost 3 percent this fall over a year earlier, she said. Meanwhile, the system’s base funding already had been cut by $7.6 million, forcing campuses to stretch their resources and serve more students with less money.
Pawlenty said, “The MnSCU system has approximately $70.8 million in reserves across all campuses and about $7 million in central reserves.”
Voss said the campuses are cautious about draining reserves “because once they’re spent, they’re gone.”
Still, she said, the system “will make the necessary reductions in a way that best serves students and the economic development needs of the state and its communities.”
Campuses already had taken belt-tightening steps as the economy worsened, she said, including:
• Reducing the number of course sections.
• Leaving vacant positions open unless they are critical and also stretching staff to fill in for employees on leave.
• Pulling back on equipment spending, including computer replacements for classrooms.
• Cutting repair and maintenance budgets and postponing some construction and remodeling projects.
• Turning down thermostats and taking other steps to conserve energy.
• Allowing essential travel only and making greater use of conference calls and interactive television.
More trouble ahead
The current trauma may look like a mild cold compared to the pneumonia the institutions could catch as the state moves to make up for a projected $4.8 billion shortfall in 2010-11.
Last summer before financial institutions began collapsing, the university was working on ambitious plans to give pay raises where they were warranted, attract more research and grant more financial aid to students from middle-income Minnesota families.
In all, the plan called for a 9.5 percent state funding increase.
“We are probably not going to get much discussion of that at the Legislature,” Pfutzenreuter said.
There’s an understatement for you.
But Minnesota is poised for a major debate about higher education’s role in a healthy economy.
Sharon Schmickle writes about national and foreign affairs, science and other topics. She can be reached at sschmickle [at] minnpost [dot] com.