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Presented to the Board of Trustees March 2007

FY2008-2009 Minnesota State Colleges and Universities System and State Economic Outlook. Presented to the Board of Trustees March 2007. State forecast fundamentals. Updates state’s financial outlook (FY2007) Provides new estimate of revenues and expenses for next biennium (FY2008-2009)

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Presented to the Board of Trustees March 2007

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  1. FY2008-2009 Minnesota State Colleges and Universities System and State Economic Outlook Presented to the Board of Trustees March 2007

  2. State forecast fundamentals • Updates state’s financial outlook (FY2007) • Provides new estimate of revenues and expenses for next biennium (FY2008-2009) • Updates planning estimates for following biennium (FY2010-2011) • Includes most recent information about national and state economic outlook • Expenses reflect current law; excludes Governor’s budget recommendation

  3. State economic outlook assumptions • GDP Growth rate • 3.4% in 2006 • 2.9% in 2007 • 3.0% in 2008 • 3.0% in 2009 • Wage and salary income growth (Minnesota) • 4.8% in 2006 • 4.9% in 2007 • 4.6% in 2008 • 5.3% in 2009 • Job growth (Minnesota) • 1.4% in 2006 • 0.5% in 2007 • 1.2% in 2008 • 1.6% in 2009 Minnesota Budget Forecast, February 2007, Minnesota Department of Finance

  4. State budget projectionsFY2008-2009 Dollars in millions FY 2008FY 2009 Revenues $16,551 $17,127 Spending 16,143 16,494 Difference 408 633 Inflation (320) (700) Balance $ 88 $ (67) Minnesota Budget Forecast, February 2007, Minnesota Department of Finance. Inflation assumptions of 2.0% FY 2008; 2.2% FY 2009

  5. State budget balancesFY2006-2011 Dollars in millions Change Balancefrom Nov FY2006-2007 $1,013 $ (25) FY2008-2009 $2,163 $ (7) (includes FY06-07 balance) FY2010-2011 $2,799 $ (418) (includes FY08-09 balance) Minnesota Budget Forecast, February 2007, Minnesota Department of Finance

  6. Population driven pressures on state spending Percent Change 2005-2010 Higher Education Ages 17-29 5.4% 11.9% Long-Term Care Ages 85 and older Medical Assistance General Population 4.9% Corrections Males 18-39 4.4% TANF Females Ages 18-34 6.4% Juvenile Rehabilitation Ages 12-17 -2.4% -0.8% E-12 Education Ages 5-17 Source: State Demographer

  7. State spending on higher education as share of all general fund spending Minnesota Budget Forecast, February 2007, Minnesota Department of Finance

  8. MnSCU state funding per FYE FY2000-2009 Assumes no new state appropriation for FY2008 and FY2009

  9. Student FYE enrollmentFY2000-2009 FY2007-2009 FYE projections as of October, 2006

  10. Percentage change in system averageannual tuition per FYE: FY1997-2009 Assumes a 4% tuition increase in FY2008 and FY2009.

  11. MnSCU colleges have long had relatively high tuition rates Minnesota State Colleges and Universities National Ranking in Tuition Rates 1979 1989 1999 2007 Colleges* 6 6 7 3 Universities 23 11 19 15 * includes only community colleges in survey Source: Washington Higher Education Coordinating Board annual national survey

  12. MnSCU average annual undergraduate tuition per FYE Tuition Only. Base year is 2000. Assumes 4% tuition increase in FY2008 and FY2009.

  13. FY2008-2009 biennial budget request versus Governor’s recommendation

  14. MnSCU general operating budget outlook FY2008-2009 Dollars in millions FY2007FY 2008FY 2009 Revenues $1,300 $1,323 $1,347 Expenses $1,300 $1,395 $1,452 Balance $ (72) $ (105) No increase in state appropriation; 4% tuition increase each year; inflation assumption 3.25% each year; MnSCU’s biennial budget request (strategic advancements and technology) included in expenses.

  15. FY2008-2009 operating budget outlook • Inflation funding in MnSCU’s biennial budget request but not in Governor’s recommendation • Various tuition freeze/cap bills currently introduced in Legislature • Board of Trustees capped system average tuition increase at 4% each year of biennium • Labor contract negotiations currently underway

  16. Timeline • November 15, 2006 – Board of Trustees approves Biennial Budget request • January 24, 2007 – Governor's budget recommendations • May 21, 2007 - Final appropriations bill • June 6 and 12, 2007 - Public hearings on operating budget including tuition and fees • June 20, 2007 – Board of Trustees approval of operating budget including tuition and fees

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