Wednesday, January 27, 2010

Bonding keeps moving, budget discussions begin

One step closer to a bonding bill

The House Higher Education and Workforce Development Finance and Policy Division met yesterday to listen to the higher education bonding requests from the Minnesota State Colleges and Universities system and the University of Minnesota. Chancellor Jim McCormick and Associate Vice Chancellor Al Johnson provided an overview of the $396 million request ($301 million without user financing). Chancellor McCormick told committee members that the request is a product of long range capital planning at each college and university.

Al Johnson educated committee members about the system’s bonding process. He said the evaluation process of projects focused on sustainability, to preserve and take care of existing facilities. New space had to be fully justified based on enrollment and program requirements. Johnson also overviewed the system’s top priority of HEAPR at $110 million. Johnson said the HEAPR budget allocation is based on the college and university priorities as well as keeping everyone “warm, safe and dry.”

Each college and university with a project on the system’s bonding list presented the details of their project to committee members. Minnesota State University, Mankato explained the importance of their project for design money for a clinical science building as an anchor to the core of the university. President Richard Davenport said the Allied Health programs are currently scattered over multiple buildings. Davenport said the focus of the building is to graduate more students in STEM fields and get them into the workforce.

Rep. Rosenthal, DFL-Edina, testified on behalf of Normandale Community College’s project for an academic partnership center and student services building, and informed committee members that the college is bursting at the seams. President Joe Opatz explained the critical need for classroom space at the college, and said that the college is the largest community college in the system, serving 15,000 students.

Students and faculty also testified on behalf of the Minnesota State Colleges and Universities bonding request. Jennifer Weil, Minnesota State University Student Association state chair, testified that the system’s number one priority of HEAPR is also the students’ first priority. Rod Henry and Russ Stanton with the IFO also spoke in support of the system's full bonding request. Stanton told members that the system needs to maintain what they have.

Committee members were asked to rank the projects for both the Minnesota State Colleges and Universities and the University of Minnesota. The committee will be hearing about economic development bonding projects today and will then forward a recommendation based on the committee rankings to the Capital Investment Committee.

Capital Investment Chair, Alice Hausman, DFL-St. Paul, has said she hopes to move a bill quickly through the process with the potential to get a bill to the floor by mid-February.

Budget discussions begin

After the committee heard about the bonding projects, committee fiscal analyst Doug Berg explained to members the current budget situation. He reminded lawmakers that the state needs to resolve the $1.2 billion budget deficit yet this biennium. Berg also explained that because of federal maintenance of effort standards in the American Recovery and Reinvestment Act, or ARRA, no general fund reductions can be made to higher education in fiscal year 2010 and no more than $46.6 million total may be taken in general fund reductions to higher education in fiscal year 2011.

Berg also explained to the committee that the Office of Higher Education is projecting a $42 million shortfall in the state grant in fiscal year 2011. Committee members discussed the shortfall and what it means to students. Chair Tom Rukavina, DFL-Virginia, said that the committee has a number of options on how to fill the shortfall. He also stated that he doesn’t recall a time where the Legislature cut the state grant program.

Rep. Lyndon Carlson, DFL-Crystal, recalled the tough financial times in the early 1980’s, but said they did not cut financial aid, but rather increased it. Mark Misukanis, Director of Fiscal Policy and Research for the Office of Higher Education, said the office is trying to be thoughtful in their recommendations regarding the financial aid program.

We can expect further discussions regarding the budget situation once the 2010 legislative session begins Feb. 4.