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Legislative Update
February 25, 2011

System discusses budget details with higher education committee members as Republican leaders begin to prepare budget
With lawmakers focused on passing finance bills out of committee before March 25, Rep. Bud Nornes, R-Fergus Falls, chair of the House Higher Education Policy and Finance committee , asked the University of Minnesota and the Minnesota State Colleges and Universities system to explain to the committee what reductions would be made if faced with a 15 percent or 20 percent cut.

To illustrate the magnitude of this type of reduction, Chancellor James McCormick and Chief Financial Officer and Vice Chancellor of Finance Laura King said if the system solved a 15 percent cut with just staff reductions, it would mean almost 1,000 full-time staff people. If solved with just faculty reductions, McCormick said it would mean 880 faculty, which means the reduction of 9,200 course sections, a reduction of 166,500 credit registrations and an enrollment decrease of more than 16,100 students. McCormick said if a 15 percent reduction to the system was solved with just tuition, it would mean a tuition increase of 12 percent. McCormick and King said a 15 percent reduction is the equivalent of closing two large universities, five of the largest colleges, or at least 10 of the smallest colleges in the system. Both McCormick and King said obviously none of these solutions alone would be acceptable, but they give committee members an idea of the impact a 15 percent reduction would have on the system.

Central Lakes College Chief Financial Officer Kari Christiansen said they have had an extensive consultation process on campus planning for $1.2 million to $2.4 million in cuts. She said they are looking at a variety of ways to solve the reduction, including layoffs, program suspensions, operating budget reductions and some tuition increase. President Richard Davenport of Minnesota State University, Mankato told committee members they are challenged to balance the budget for fiscal year 2012, and if cut 15 to 20 percent, they would be looking at spending reductions of $6 million to $10 million.

Davenport told committee members that Minnesota State University, Mankato also had extensive consultation on budget planning with monthly meet and confers; all-staff email messages and updates; town hall open forums; proposed reduction plans available via the intranet for all faculty, staff and students to react; and an online comment portal on the university’s budget Web site. Through this process, Davenport said they identified $5.7 million, or 6 percent of the budget, in instructional reduction with faculty position layoffs and program closures. The university also identified $1.9 million, or 7 percent, in non-instructional reductions including elimination of staff positions and reorganizations, and four varsity sports have been indentified for elimination.

University of Minnesota President Bob Bruininks said the trade-offs are not insignificant and told Higher Education committee members that the university could cut all four of its coordinate campuses and still not save enough to address the cuts the size of 15 or 20 percent.

Gov. Mark Dayton has recommended a 6 percent reduction to the Minnesota State Colleges and Universities system. Senate Majority Leader Amy Koch, R-Buffalo, said she would like to see a vote taken next week on the governor’s budget plan and indicated she expects bipartisan opposition to Dayton’s plan that raises $4 billion in tax revenue. However, the governor’s plan does not have an author and has not been introduced in bill format yet.

As the Republican Legislature and DFL governor compromise to find a solution to the state’s budget deficit, the Senate Republican caucus sent a letter to Gov. Dayton this week indicating their position on the governor’s budget. “Minnesotans want us to work together at the Capitol and we believe we are off to a great start,” the letter reads. “We write to make perfectly clear, however, that we all are opposed to raising taxes to balance the 2012-2013 $6.2 billion deficit.” Majority Leader Koch said that given the governor’s budget proposal and depth and breadth of the tax increases, they want to make it very clear that tax increases are not on the table for Senate Republicans. Senate Minority Leader Tom Bakk, DFL-Cook, said he was surprised by the letter, and if Republicans really intend to put together a budget without revenue increases, they have a lot of work to do.

The next step in the budget-balancing process is the release of the February economic forecast, scheduled for 11:30 a.m. Monday. Commissioner of Minnesota Management and Budget Jim Schowalter indicated that the forecast might show an increase in tax revenues and a smaller projected deficit. The February forecast is the indicator lawmakers use in preparing a budget. Legislative leaders have indicated they are digging into state agency’s budget detail in the committee process to determine the $32 billion spending budget Republicans have set. Koch said they are focused on what will make Minnesota even more competitive and that they are open to compromise within the $32 billion spending limit. House Majority Leader Matt Dean, R-Dellwood, said Republican leaders are focused on how to spend the $32 billion they have and not raise revenue. He indicated there are people in the House Republican caucus who would like to see a budget less than $32 billion. Senate Deputy Majority Leader Geoff Michel, R-Edina, said there are 87 days before the May 23 constitutional adjournment date, and his caucus would like to get some clarity on where they are going with the budget. He said the committee deadlines are very aggressive and leadership is pushing committee chairs to craft their bills.

Dean said leadership is moving forward with setting budget targets. Chair of the House Ways and Means Committee Mary Liz Holberg, R-Lakeville, said the House is going to meet with Senate counterparts today and once they have the new budget numbers from the February forecast on Monday, they will move quickly in setting the budget targets for each of the committees. Holberg said to expect targets by the second week of March.

House Minority Leader Paul Thissen, DFL-Minneapolis, said he is pleased Republican leaders want to move the budget process forward, but expressed concern that for Minnesotans to have a voice in what he said is going to be a devastating budget proposal, there needs to be time allowed for public input.

House holds hearing on governor’s bonding bill
Rep. Larry Howes, R-Walker, chair of the House Capital Investment committee and author of Gov. Dayton's bonding proposal, held a hearing this week to discuss the bonding bill. It includes $127.6 million in projects and repairs and replacement for the Minnesota State Colleges and Universities system. Rep. Bev Scalze, DFL-Little Canada, questioned Howes about the future of proposed capital projects. Howes said if the bills are referred to his committee, they would get a hearing. When asked why he introduced Dayton’s bonding proposal as legislation, Howes said it is protocol to introduce the governor’s proposal and he thought it was worthwhile to have a hearing. After much testimony supporting the projects in the bill, the measure was laid over for further consideration. The Senate has not scheduled a capital investment hearing; however, Sen. Keith Langseth, DFL-Glyndon, recently introduced the companion bill. The legislation can be found here.

Lawmakers approve four new University of Minnesota Regents
Lawmakers approved four new regents for the University of Minnesota this week. Steve Sviggum, a former House speaker, was chosen to represent the Second Congressional District; business executive David McMillan was chosen to represent the Eighth Congressional District; David Larson, a retired Cargill executive, was selected for a second term representing the Third Congressional District; and Laura Brod, a former Republican representative, was selected for the at-large seat over current regent Steven Hunter, the secretary/treasurer of the AFL-CIO. The Board of Regents consists of 12 members who serve staggered six-year terms, with one regent selected from each of the state’s eight congressional districts and four who serve at-large.

U.S. House passes current year budget, Senate scheduled to take it up next week
After 580 amendments and a weeklong debate, the U.S. House of Representatives early Saturday morning passed H.R. 1, which reduces spending for the current fiscal year 2011 by almost $100 billion and cuts the Pell Grant program maximum grant by $845 for the award year starting July 1. With the passage of this bill and the differences between the House and Senate, federal departments are preparing for a government shut down in the event Congress doesn't resolve the fiscal year 2011 budget, operating under a continuing resolution that expires March 4. However, a shutdown is highly unlikely with options such as week-to-week funding, or departments operating under a "band-aid" approach to keep the federal government operational. Senate Majority Leader Harry Reid, D-Nevada, introduced a short-term measure that would maintain fiscal year 2010 spending levels through March 31 to allow time for negotiation on a longer-term spending bill. U.S. House of Representatives Speaker John Boehner, R-Ohio, said the House is working on a measure that would cut $4 billion from current funding levels in a two-week extension.

No action was taken on the federal budget this week while both the House and Senate are on recess. All congressional members are back to work on Monday, and the Senate will begin working on their version of the bill. President Obama has threatened to veto the House version of the bill.

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Here's What's Happening at the Capitol:
This schedule shows all meetings that we are aware of at the time of publication that MAY have an impact on the system. This schedule may change. Please watch the House and Senate schedules posted on the Legislative web site.

Monday, February 28
11:15 AM
Senate in Session

11:30 AM (televised and Senate webcast live)
February forecast released

3:00 PM
Senate Higher Education
Room: 107 Capitol
Chair: Sen. Michelle L. Fischbach
Agenda:
Minnesota State Colleges and Universities Trustee Confirmations:
Trustee Duane Benson
Trustee Philip Krinkie
Trustee Alfredo Oliveira
Trustee Thomas Renier
Trustee Michael Vekich

3:00 PM
Senate Education
Room: 15 Capitol
Chair: Sen. Gen Olson
Agenda: A presentation by the Foundation for Excellence in Education

3:00 PM
House in Session

4:00 PM (or 30 minutes after session ends)
House State Government Finance
Room: 5 State Office Building
Chair: Rep. Morrie Lanning
Agenda: Budget overview by Explore Minnesota Tourism
Budget overview by Administrative Hearings
HF577 (Lanning) Legal fees imposed by federal courts funding provided, reimbursement of expenses provided relating to the recount in the 2010 gubernatorial election, and money appropriated.
HF299 (Quam) Executive branch agency retained savings program established.
HF89 (Benson) Voter picture identification required before receiving a ballot, voter identification card provided at no charge, notice required, and provisional balloting procedure established.

5:00 PM
House Education Reform and Education Finance Joint Hearing
Room: 15 State Capitol
Chairs: Rep. Sondra Erickson, Rep. Pat Garofalo
Agenda: "The Florida Story"
Foundation for Excellence in Education
Patricia Levesque, Executive Director, Foundation for Excellence in
Education
Jay Greene, Department Head and 21st Century Chair in Education Reform, University of Arkansas

Tuesday, March 1
8:15 AM
House Education Reform
Room: Basement Hearing Room State Office Building
Chair: Rep. Sondra Erickson
Agenda: HF682 (Kiel) Career and technical levy modified; and career and technical education credits provided.

8:30 AM
Senate Finance
Room: 123 Capitol
Chair: Sen. Claire A. Robling
Agenda:
Presentation of February 2011 Economic Forecast:
Commissioner Jim Schowalter
Tom Stinson, State Economist
Margaret Kelly, Budget Director

10:30 AM
Senate Jobs and Economic Growth
Room 107 Capitol
Chair: Sen. Geoff Michel
Agenda:
S.F. 1-Michel: Job creation; business tax reductions; department of natural resources (DNR) permitting efficiency; environmental review requirements modifications.

12:30 PM
House Higher Education Policy and Finance
Room: Basement State Office Building
Chair: Rep. Bud Nornes
Agenda: University of Minnesota Academic Health Center presentation
Minnesota Partnership for Biotechnology and Medical Genomics
Presentation (University of Minnesota and Mayo Clinic)

12:30 PM
House Jobs and Economic Development Finance
Room: 10 State Office Building
Chair: Rep. Bob Gunther
Agenda: DEED budget overview
HF102 (Mahoney) Minnesota science and technology program established

3:00 PM
Senate Education
Room: 15 Capitol
Chair: Sen. Gen Olson
Agenda: S.F. 451-Stumpf: School districts career and technical levy formula modification; career and technical education academic credit requirement.

5:00 PM
House Ways and Means
Room: 200 State Office Building
Chair: Rep. Mary Liz Holberg
Agenda: HF110 (Kahn) Legislative Commission on Pensions and Retirement membership increased.
Overview of February forecast by MMB Commissioner Jim Schowalter and State Economist Tom Stinson

Wednesday, March 2
3:00 PM
Senate Higher Education
Room: 107 Capitol
Chair: Sen. Michelle L. Fischbach
Agenda: Presentations from student and faculty groups from the University of Minnesota and the Minnesota State Colleges and Universities

3:00 PM
Senate Education
Room: 15 Capitol
Chair: Sen. Gen Olson
Agenda:
S.F. 325-Hann: MNovate commission to provide leadership for the creation of new and innovative models of public schools and schooling establishment.
S.F. 289-Limmer: School finance capital expenditure health and safety revenue program modifications; health and safety policy.
S.F. 95-Bonoff: Independent school district #284, Wayzata; alternative facilities revenue program eligibility.
S.F. 315-Olson, G.: School lease levy authority modification.

Thursday, March 3
11:00 AM
Senate in Session