TUITION HIKES, LAYOFFS POSSIBLE: University seeks solutions to fix structural deficit

Maxwell Mayleben ® Editor in Chief |
Photo by Mansoor Ahmad ® Media Director |

Minnesota State University, Mankato, in the face of a multi-million dollar deficit, is looking to balance its budget with 3% tuition increases and possible layoffs. 

The University is currently looking at a structural deficit of $3 million — a deficit they want to solve before a new president takes office July 1. 

“We need to take care of the $3 million deficit” said Rick Straka, Vice President of Finance and Administration at MNSU. “We have a new president coming in. We owe it to the new leader coming in, that he or she takes on a balanced budget.”

The University’s two main areas of revenue are tuition and state allocations from the state. Over 20 years ago, over two-thirds of the revenue came from state allocations while one-third came from tuition. 

Over the course of the dot com bubble burst, 9/11, and the 2008 Great Recession, those percentages have flipped. Tuition now makes up an estimated two-thirds of MNSU’s revenue and state allocations make up one-third. 

COVID-19 has been a significant player in state allocations, with the amount of available state funding dwindling. 

“In the past, when there has been a state budget deficit, higher ed has played a role in balancing the budget.” Straka said. “They look at us and say ‘You have another source of income.’” 

That source of income, of course, is tuition. 

The university has factored a 3% tuition increase for undergraduate students into its budget planning process.

“We also know that there is great pressure from students and society as a whole about the affordability of college,” said Straka, recognizing student apprehension to tuition increase. 

Over the course of the last 10 years, tuition has been “frozen” for four of them. This means that there was no increase or decrease. 

Since 2013 (when the economic crisis finally began to subside in Minnesota), we have seen a 14.22% increase in tuition over time. 

Student leaders, like Student Government President Andrew Trenne, are less than pleased at the increase in tuition. 

“Defaulting to just having the students pay more is an answer, but not the correct answer,” said Trenne. “As Student Government, we are not supportive of a 3% tuition increase.”

Trenne said college affordability is a critical issue for many students. 

“Tuition increases could make or break a student,” said Trenne. “What we need to consider is how many students will be affected and can’t afford to be here.”

With a tuition increase comes the fear of how a higher price tag will affect enrollment. 

Straka maintains MNSU’s low tuition will still be a draw for potential students. 

“For a Minnesota undergraduate student, we are the most affordable option in the five-state area,” said Straka. 

Another tool to solve the budget issues that is being considered is “retrenchment,” which is a process that the university goes through to enable the ability to lay off faculty and staff, even those with tenure. 

Retrenchment isn’t considered often, with the last time it was brought to the table for consideration being 10 years ago. At that time, 12 faculty members were laid off. 

This tool has been used more recently in MNSU’s sister institutions such as Minnesota State University, Moorhead. The northern member of the Minnstate system went through retrenchment last year, due to a decrease in enrollment and decrease in funding from the state. 

Moorhead’s retrenchment resulted in 30 faculty members being laid off across 10 disciplines, causing the closure of 10 programs. 

The process of retrenchment, according to the Minnesota State System guidelines, is not a short path. 

Before even considering retrenchment, the university is required to seek out other ways to reduce expenditures, such as attrition, phased retirements and intra system transfers. 

The administration has already implemented many of these alternatives. Attrition and retirement incentives being large tools for the University. 

Attrition is the method of saving money that involves the separation of an employee from an organization and not filling that role again. 

Interim Provost Matt Cecil, in the Student Government meeting yesterday spoke to the use of attrition at the administration level. 

“Last summer, we had four admin positions open, and we didn’t fill any of them,” said Cecil, “We did create one new administrator that took on a bunch of that portfolio.”

Another method the University has used to save money and lower the structural deficit is using a board approved employee separation incentive or “BESI”. Twenty-one faculty members took this option, resulting in an estimated $1.7 million of savings. 

Only after these efforts have been exhausted can the University announce their consideration for retrenchment. This announcement was released last week during the “Meet and Confer” sessions. 

Gregg Marg, the President of the Faculty Association, speaks to staff and faculty concerns with the recent announcement. 

“Obviously, it makes people nervous any time people’s jobs are on the line,” said Marg. “Our bigger concern is that this affects the students. Whenever we are losing faculty, that leads to fewer classes, and potentially fewer programs.”

In response to these concerns, Straka said, “We try to ensure that we have as minimal impact as we can, but I don’t think we can say we will have zero impact.” 

As it is still in the early phases of budget talks, more information on both the tuition increases as well as retrenchment will be addressed next month. 

Straka said faculty will be working presenting solutions to budget issues, saying, “Expect to see a draft plan or proposal in March. We expect to get feedback through the months of March and April, and then finalize a plan when the term is done in May.”