Monday, May 17, 2010

Final legislative wrap-up

2010 Legislative Summary
Session review

The 2010 legislative session began with a flurry of activity Feb. 4 with the Senate Capital Investment committee rolling out their version of a bonding bill the first day of session. After spending the summer and fall traveling the state touring bonding projects, lawmakers were ready to get to work on a bill. Between the House, Senate and Minnesota Management and Budget, colleges and universities in the system hosted over 50 bonding visits. Traditionally, the bonding bill is not completed until the end of session; however, Rep. Alice Hasuman, DFL-St. Paul, and Sen. Keith Langseth, DFL-Glyndon, chairs of the House and Senate Capital Investment committees, said that the bill should stand alone and not be delayed until the end of session, because interest rates are low and bids are coming in low.

Lawmakers passed two different bills out of conference committee. When it appeared the governor would veto the first bill, legislative leaders pulled the bill back to re-work it and include projects the governor wanted. The final bill sent to the governor included $239 million (including user financing) in projects and repair and replacement for the Minnesota State Colleges and Universities system, which was a reduction of $66 million from the first bill. The governor line-item vetoed the bonding bill down to $680 million with cuts to the system projects over $130 million. In the final days of session, lawmakers attempted to make one last run at a bonding bill to include the vetoed projects, however the bill, HF 3492, ended up being only technical in nature.

Also competing for lawmakers attention in what is normally considered a bonding year, was an anticipated $1.2 billion budget shortfall for the current biennium, which was later adjusted in the February Forecast to $994 million for the biennium. For the upcoming FY2012-13 biennium, Minnesota Management and Budget projected a $5.8 billion shortfall.

A total reduction of $46.6 million was targeted for higher education. Under the 2009 American Recovery and Reinvestment Act, each state was required to follow a “maintenance of effort” spending proposal in education. If a state chose to receive federal education funding, it could not dip below the 2006 funding levels. This meant that Minnesota could only cut $46.6 million more out of the higher education budget in fiscal year 2011. If the cut was distributed in accordance with 2006 funding levels, the Minnesota State Colleges and Universities would receive a $10.467 million cut while the University of Minnesota would see a reduction of 36.1 million. The governor recommended a reduction to the Minnesota State Colleges and Universities system of $10.5 million and the House and Senate followed with the same recommendation for the system.

The Legislature approached the almost $1 billion budget deficit in three phases. The first phase resolved approximately one-third of the state’s budget deficit through a supplemental budget bill that made $313 million in reductions to state agencies and cuts to county and city aid. The reductions included $10.5 million to the Minnesota State Colleges and Universities system. The next two phases in the budget balancing process were slated to be the health and human services bill and the K-12 education bill. After passing the first budget bill, lawmakers went home to their districts for an Easter/Passover break and there were rumors around the Capitol that the Legislature would take an extended recess while waiting for Congress to pass legislation that would appropriate a little over $400 million to the state in federal funds.

However, legislators stayed in St. Paul and worked on other issues, such as K-12 education initiatives to help strengthen a potential second application for Race to the Top. As lawmakers worked to balance the remaining deficit, which included using the $408 million in federal funds to plug the majority of the remaining $536 million shortfall, two things happened; it became clear Congress would not pass legislation in time to rely on the $408 million in federal funding, and the Minnesota Supreme Court overturned Gov. Pawlenty’s unallotment from the 2009 session. While a nutritional program was the only plaintiff in the case and the court ruled on that program only, lawmakers and the governor were concerned about other cases being brought forward and sought to resolve what they considered to be a $3 billion deficit.

The last week of session, the Legislature passed a budget balancing bill that resolved the $3 billion deficit, and included $433 million in revenue through a fourth tier income tax bracket. As soon as the bill arrived on the governor’s desk he vetoed it claiming the tax increase would disproportionately harm small business owners and hamper job creation in the state. Gov. Pawlenty also said the bill does not do enough to address a projected nearly $5 billion deficit for the 2012-2013 biennium. Lawmakers got back to work on a bill.

Lawmakers worked around the clock the last remaining days of session to wrap-up outstanding bills and try to find an agreeable solution to balance the budget. The House and Senate passed another budget bill to solve the state’s shortfall but lawmakers did not have a firm agreement with Gov. Pawlenty. The bill was passed in the remaining hours and would resolve the deficit mostly through spending cuts. Negotiations over the bill fell apart however, over a provision dealing with health care funding.

The 2010 regular legislative session came to an end at approximately five minutes to midnight Sunday, May 16 when the House and then Senate adjourned sine die. House Majority Leader Tony Sertich, DFL-Chisholm, said the Legislature had an agreement with the governor, and at 12:01, Monday, May 17, the governor would call lawmakers back for a special session. Members reconvened for a special session at 12:01 a.m., May 17, and the agreed-upon budget balancing bill became HF 1 / SF 1.

The $50 million unallotment for the Minnesota State Colleges and Universities system was included in the bill. The cut was divided between the Office of the Chancellor and the campuses with a cut of $2.079 to the Office of the Chancellor and $47.9 million to the campuses. There is also rider language that states none of the reductions made in the Office of the Chancellor may be charged back or allocated to the campuses.

Members passed HF 1/SF 1 and the Senate adjourned the special session at 10:45 a.m. Monday, May 17 and the House adjourned shortly thereafter. The complete bill can be found here.

Bonding Bill

Early in the session, lawmakers passed a $1 billion bonding bill, which included $305.9 million in projects and repair and replacement for the Minnesota State Colleges and Universities system. Gov. Pawlenty indicated he would veto the bill due to the large size, so legislators held back the bonding bill in order to try and reach a compromise. The capital investment conference committee went back to work to revise the bill. Members brought the total down slightly from $999.9 million to $986.4 million, and included the core projects identified by the governor. The bill was revised once again to include an $11.5 million increase for the sex offender treatment facility in Moose Lake that the governor wanted, and was sent to the governor at $999.6 million. The new bill included $239 million (including user financing) in projects and repair and replacement for the system, which was a reduction of $66 million.

Gov. Tim Pawlenty line-item vetoed the bonding bill down to $680 million. In his veto letter to legislative leadership, the governor told lawmakers that “like any family or business, state government needs to live within its means and follow a budget,” and that he had said earlier he would not sign a bill as large as what was presented to him. The final bill the governor signed however; was smaller than his initial bonding recommendation. The governor cut 16 projects from the system, which totaled more than $130 million in line-item vetoes. Those vetoes include:

• Anoka Ramsey Community College fine arts building renovation - $5,357,000
• Anoka Ramsey Community College bioscience and allied health addition - $400,000
(original request was $16,484,000)
• Hennepin Technical College learning resource center - $10,566,000
• Minneapolis Community and Technical College workforce program renovation - $12,990,000
• Ridgewater College lab construction and renovation - $14,300,000
• South Central College, Faribault classroom renovation and addition - $13,360,000
• North Hennepin Community College bioscience and health careers center addition - $600,000
(original request was $26,581)
• Minnesota State University Moorhead Livingston Lord library and information technology renovation - $14,901
• Southwest Minnesota State University science lab renovation - $200,000
(original request was $5,666,000)
• St. Cloud State University integrated science and engineering laboratory facility - $42,334,000
• Dakota County Technical College transportation and emerging technologies lab renovation - $300,000
(original request was $7,230,000)
• Rochester Community and Technical College workforce center co-location - $3,238,000
• System wide initiative (nine campuses) for renovation of STEM classrooms - $4,835,000
• Minnesota State University, Mankato clinical science building design - $1,908,000
• Minnesota West Community and Technical College, Canby wind turbine training facility - $200,000
• Mesabi Range Community and Technical College engineering program - $3,000,000

Also included in the bill was an appropriation for $200,000 for a matching grant to Pine Technical college to design, construct, furnish and equip an entrepreneurship and technology business incubator. Lawmakers included $12 million to the City of Mankato to expand the Civic Center, including a performing arts theater and the Southern Minnesota Women’s Hockey Exposition Center for joint use by the city and Minnesota State University, Mankato; however, the governor vetoed this project.

The final bill includes lease revenue language for St. Cloud Technical College. The Minnesota State Colleges and Universities are to pay Minnesota Management and Budget one-third of the lease revenue received from the Allied Health Building property acquired for St. Cloud Technical College. The bill also includes language that allows a campus to use any unspent portion of an appropriation for a project that is completed for HEAPR purposes at the campus.

Budget Bill

The February economic forecast indicated that the state would be facing a $994 million state budget deficit for fiscal year 2011. The Legislature approached the almost $1 billion budget deficit in three phases. The first phase resolved approximately one-third of the state’s budget deficit through a supplemental budget bill that made $313 million in reductions, including a cut to the Minnesota State Colleges and Universities system.

Included in the higher education article of the bill is $10.467 million in reductions to the system in fiscal year 2011. Of the cut to the system, $500,000 is to be reduced from the central system office, along with an additional $500,000 internal obligation. The bill includes language that says the Board of Trustees must make a good-faith effort to make the reductions at campuses and the central office in a manner that minimizes reductions related to providing direct services to students and maximizes reductions for administrative services not providing direct services to students. The bill also increases the revenue fund authority in statute from $200 million to $300 million for college and university revenue fund projects.

In the area of financial aid, lawmakers had to fill a $42 million state grant shortfall. In committee testimony, Rep. Lyndon Carlson, DFL-Crystal, explained the circumstances behind the shortfall. Carlson said many more students are enrolling in higher education institutions and a larger number of these students have a greater financial need. The Office of Higher Education moved dollars from the second year of the biennium to the first year to cover the cost of this greater need, which has resulted in the shortfall in the second year, fiscal year 2011. Carlson also said that it is difficult to predict how much funds will be needed in the state grant program from year to year, but under law, the Office of Higher Education has to prorate students' awards if there is a shortfall. Due to the shortfall, an average loss students will see in their state grant awards is $300, but some students could see up to a reduction of $1,000 in their state grant. 7,000 students will lose their state grant award altogether and over 5,000 of those students are from lower cost two-year community and technical colleges.

The state grant shortfall was a topic of much debate among legislators. Rep. Tom Rukavina, DFL-Virginia, chairman of the House higher education committee expressed his regret at having to cut the state grant program and indicated he had hoped more could have been done for the students and higher education.

The bill reduces state work study $1.768 million in fiscal year 2011, and also reduces the summer transition grant funding by $1 million in fiscal year 2011. The bill reduces from nine to eight, the number of semesters that a student can attend while maintaining eligibility for the state grant program. A provision in the bill increases the assigned student responsibility and the assigned family responsibility. Both of these actions will help to resolve the shortfall. The bill also modifies the Achieve scholarship program and reduces the technical and community college emergency grants and makes clear that the emergency grant appropriation in fiscal year 2009 was a one-time appropriation. The bill also increases the borrowing limit for the SELF Loan program. The complete bill can be found here.

Higher Education Policy Bill

In addition to the budget bill, lawmakers passed a higher education policy bill. As of the time of this writing, the governor has not yet signed the bill. Included in the bill is:

• Language that increases the age of a senior citizen in statute from 62 to 66 to receive a tuition discount.

• Requirement of colleges and universities to make a reasonable attempt to identify and purchase locally grown food.

• The system, Minnesota Chamber of Commerce and representatives of industry groups and labor unions are to study program requirements for certificates and diplomas awarded by the system to determine the feasibility of designing technical education programs to allow students to have more opportunities to earn credentials with lower credit requirements that could be combined into higher level certificates or diplomas.

• Office of the Chancellor is required to streamline services provided through the office to reduce expenditures, better target the use of state resources and provide services at the most appropriate and efficient level so as not to duplicate any services provided at the institution level.

• Post-retirement health insurance premium reimbursement language.

• Board of Trustees is required to establish a pilot project to develop partnerships and training and employment opportunities for surgical technologists at institutions that offer a surgical technologist program.

• Minnesota State Colleges and Universities system and the University of Minnesota are required to study nanotechnology research and education and report to the Legislature on ways nanotechnology is used responsibly and safely.

• Pilot project language that would establish up to eight institutions in the Minnesota State Colleges and Universities system to invest some campus reserves in a local bank.

• The Office of Higher Education is required to monitor the implementation of the Higher Education Opportunity Act as it relates to disclosure of textbook pricing and other information to students.

• Credit transfer language that requires the Board of Trustees to develop and implement a plan to improve credit transfers within the system. The Board may convene working groups of affected faculty, staff, students and administrators in the system to work on issues and barriers to credit transfer. The language also states the Board must provide systemwide transfer information on campus Web sites necessary to determine the transferability of course credits, and the information must be easily accessible and kept current. The complete bill can be found here.

Contract Ratification Bill

Legislators passed the contract ratification bill the last couple weeks of session and the governor signed the bill May 13, 2010. An amendment was included in the bill that requires the Minnesota State Colleges and Universities system to submit a summary of the proposed agreements, awards or plans to Minnesota Management and Budget at a time and in a manner specified by the commissioner, so the commissioner can post information relating to these appointing authorities on the Web site. The bill includes the contracts and plans for Minnesota State College Faculty or MSCF; the Minnesota State University Association of Administrative and Service Faculty or MSUAASF; the American Federation of State, County and Municipal Employees or ASCFME, the Minnesota Association of Professional Employees or MAPE; the Middle Management Association or MMA; the Minnesota State Colleges and Universities Administrators; the Commissioner’s Plan; and the Managerial Plan.

State Employee Retirement Incentive Bill

The Legislature passed an early retirement incentive bill, Chapter 337, this session that was introduced in the 2009 session, however failed to make it to the governor’s desk last year. Lawmakers took up the bill again this session, passed it, and the governor signed the legislation into law May 13, 2010. The bill provides for employer discretion regarding who will be offered the incentive while taking into consideration equity, budgetary constraints and workforce planning concerns. Executive, legislative and judicial branch employees are eligible for the incentive, including Minnesota State Colleges and Universities employees. The employee has to have at least 15 years of service and is eligible for retirement. The incentive is an amount equal to the value of up to 24 months of employer paid medical and dental insurance programs to be paid into the employee’s pre-tax Health Care Savings Plan.

Omnibus Pension Bill

The omnibus pension bill worked its way through the Legislative Commission on Pensions and Retirement and the appropriate legislative committees, the differences between the House and Senate bills were worked out in conference committee, and the final bill passed both bodies prior to being sent to the governor. The last few days of session the governor’s spokesman, Brian McClung indicated the governor would veto the bill. The bill's Senate author, Don Betzold, DFL-Fridley, noted that the bill was the product of a year's worth of negotiations, and said the veto threat came as a surprise to him. Gov. Pawlenty did end up signing the bill in the final hour. The bill includes a provision that authorizes the Minnesota State Colleges and Universities system to contract out for investment selection and review services for the Individual Retirement Account Plan with providers other than just the State Board of Investment.

Omnibus Agriculture and Veterans Affairs Bill

The omnibus agriculture and veterans affairs bill includes a provision that extends the sunset on the veteran centers on higher education campuses from June 30, 2011 to June 30, 2012. Included in the bill is language that requires the commissioner of veterans affairs to report to the Legislature regarding alternative funding sources for the higher education veterans assistance program. Also included in the bill is language that requires the commissioner of agriculture to convene one or more meetings with milk producers, other industry stakeholders, and representatives of the University of Minnesota and the Minnesota State Colleges and Universities system whose work relates to the dairy industry, to consider the elements of a dairy research and education facility which would represent a partnership between higher education institutions and the dairy industry.

Omnibus Economic Development Bill

The employment and economic development policy bill was signed by the governor with the exception of two line-item vetoes; $2 million for a grant to the Mountain Iron Economic Development Authority for renewable energy projects, and an appropriation of 2.706 cents per ton to the Virginia Regional Medical Center for operating room equipment and renovations. Included in the bill that relates to the Minnesota State Colleges and Universities system includes language regarding the Minnesota Science and Technology Authority. Included in the duties of the Authority is working with the University of Minnesota, Minnesota State Colleges and Universities and the Mayo Clinic in promoting collaborative efforts to respond to federal funding opportunities. A Science and Technology Initiative Advisory Commission of 18 members is established in law and includes two representatives from the system, including a faculty member actively involved in science and technology research.

The bill also adds an additional duty of the Board of Trustees in statute. The Board must identify colleges offering flexible academic programs that accommodate the needs of laid-off workers and assist its other institutions in determining whether to offer similar programs. Language reads that colleges must increase the number of certificate programs available to meet the needs of unemployed Minnesotans.

Omnibus K-12 Education Bill

The K-12 education bill traveled a long road this session. The original bill in the House, HF 2431, which made its way through the committee process over the duration of the session, was tabled late in the session in the House Ways and Means committee, so it was replaced with HF 3833, another omnibus bill. That bill was fast-tracked and passed the House during the last week of session. The Senate did not have one omnibus K-12 education finance and policy bill, instead the Senate split proposals into smaller bills.

In the final hours of session, the House took up HF 2072, a third version of an omnibus K-12 education bill, sent it to conference committee, and then passed the final bill on the floor. However, the Senate rejected the bill. The House voted to give school boards the power to renew expiring property tax hikes without voter approval, but the Senate voted the bill down to send back to conference committee. Opponents said the proposal would deny voters the ability to renew a property tax increase previously approved by referendum. The bill also did not include the controversial provision regarding alternative teacher licensure or address job evaluation for existing teachers. Throughout session, the bill contained some contentious issues as lawmakers and the governor tried to put together a second-round application for federal Race to the Top funds. The governor, legislators and teacher unions could not agree on some of the key reforms that are part of the grant application criteria, including alternative teacher licensure.
During the special session Monday morning, legislators tried one more time to pass a bill, and took up the K-12 education bill in the form of SF 2 / HF 2. Members on the Senate floor said they were able to work out an agreement with the governor, and the Senate passed the bill. However, the House was unable to get enough votes needed (90) to suspend the rules and take up the bill. So the omnibus K-12 education bill once again did not pass.


The bills summarized in this report do not include all bills passed during the 2010 session that relate to the Minnesota State Colleges and Universities system. Please watch for Mandates and Curiosities, the annual publication that highlights and summarizes new laws relating to higher education in Minnesota, to be posted to the government relations Web site in the coming weeks.

The 2011 legislative session is scheduled to begin January 4, 2011. When lawmakers return to St. Paul for the 2011 legislative session, the make-up of the Legislature will look different. 21 legislators have announced their retirement, including Representatives Dan Severson, R-Sauk Rapids, Larry Haws, DFL-St. Cloud, Rob Eastlund, R-Cambridge, Tom Emmer, R-Delano, Marty Seifert, R-Marshall, Laura Brod, R-New Prague, Jeremy Kalin, DFL-North Branch, Doug Magnus, R-Slayton, Randy Demmer, R-Hayfield, Paul Kohls, R-Victoria, Karla Bigham, DFL-Cottage Grove, Margaret Anderson Kelliher, DFL-Minneapolis, and Cy Thao, DFL-St. Paul.

Retiring senators include Senators Tarryl Clark, DFL-St. Cloud, Steve Dille, R-Dassel, Dennis Frederickson, R-New Ulm, Debbie Johnson, R-Ham Lake, Mee Moua, DFL-St. Paul, Jim Vickerman, DFL-Tracy, Steve Murphy, DFL-Red Wing, and Pat Pariseau, R-Farmington.

The primary election this year has been moved up to August 10, 2010 and Election Day is November 2, 2010. Offices up for election this year are state senators and state representatives, state executive officers including the governor, and U.S. representatives. You may tune in to election activity and campus events on the government relations Web site here.

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